HANOVER INSURANCE GROUP INC/ (THG) Stock Fundamental Analysis
NYSE:THG - New York Stock Exchange, Inc. - US4108671052 - Common Stock - Currency: USD
THG gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 143 industry peers in the Insurance industry. There are concerns on the financial health of THG while its profitability can be described as average. THG has a decent growth rate and is not valued too expensively.
1. Profitability
1.1 Basic Checks
THG had positive earnings in the past year.
In the past year THG had a positive cash flow from operations.
Each year in the past 5 years THG has been profitable.
In the past 5 years THG always reported a positive cash flow from operatings.
1.2 Ratios
THG's Return On Assets of 2.84% is fine compared to the rest of the industry. THG outperforms 66.43% of its industry peers.
THG has a better Return On Equity (14.41%) than 72.03% of its industry peers.
THG has a Return On Invested Capital of 3.16%. This is in the better half of the industry: THG outperforms 67.83% of its industry peers.
The Average Return On Invested Capital over the past 3 years for THG is below the industry average of 4.13%.
The last Return On Invested Capital (3.16%) for THG is above the 3 year average (1.75%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.84% | ||
| ROE | 14.41% | ||
| ROIC | 3.16% |
ROA(3y)1.29%
ROA(5y)1.89%
ROE(3y)7.13%
ROE(5y)9.18%
ROIC(3y)1.75%
ROIC(5y)2.21%
1.3 Margins
With a Profit Margin value of 6.98%, THG perfoms like the industry average, outperforming 46.15% of the companies in the same industry.
In the last couple of years the Profit Margin of THG has declined.
THG has a Operating Margin (9.29%) which is in line with its industry peers.
THG's Operating Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 9.29% | ||
| PM (TTM) | 6.98% | ||
| GM | N/A |
OM growth 3Y1.9%
OM growth 5Y-0.99%
PM growth 3Y-5.85%
PM growth 5Y-5.09%
GM growth 3YN/A
GM growth 5YN/A
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so THG is destroying value.
The number of shares outstanding for THG has been increased compared to 1 year ago.
Compared to 5 years ago, THG has less shares outstanding
Compared to 1 year ago, THG has an improved debt to assets ratio.
2.2 Solvency
The Debt to FCF ratio of THG is 1.01, which is an excellent value as it means it would take THG, only 1.01 years of fcf income to pay off all of its debts.
THG's Debt to FCF ratio of 1.01 is fine compared to the rest of the industry. THG outperforms 64.34% of its industry peers.
A Debt/Equity ratio of 0.26 indicates that THG is not too dependend on debt financing.
The Debt to Equity ratio of THG (0.26) is better than 64.34% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.26 | ||
| Debt/FCF | 1.01 | ||
| Altman-Z | N/A |
ROIC/WACC0.37
WACC8.48%
2.3 Liquidity
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | N/A | ||
| Quick Ratio | N/A |
3. Growth
3.1 Past
THG shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 214.48%, which is quite impressive.
The Earnings Per Share has been growing by 10.31% on average over the past years. This is quite good.
Looking at the last year, THG shows a small growth in Revenue. The Revenue has grown by 3.13% in the last year.
THG shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 5.41% yearly.
EPS 1Y (TTM)214.48%
EPS 3Y15.11%
EPS 5Y10.31%
EPS Q2Q%25.65%
Revenue 1Y (TTM)3.13%
Revenue growth 3Y6.83%
Revenue growth 5Y5.41%
Sales Q2Q%3.91%
3.2 Future
THG is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 8.87% yearly.
The Revenue is expected to grow by 6.56% on average over the next years.
EPS Next Y12.07%
EPS Next 2Y10.26%
EPS Next 3Y8.87%
EPS Next 5YN/A
Revenue Next Year6.49%
Revenue Next 2Y6.11%
Revenue Next 3Y6.56%
Revenue Next 5YN/A
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 12.33, the valuation of THG can be described as correct.
Compared to the rest of the industry, the Price/Earnings ratio of THG is on the same level as its industry peers.
Compared to an average S&P500 Price/Earnings ratio of 26.19, THG is valued rather cheaply.
Based on the Price/Forward Earnings ratio of 10.75, the valuation of THG can be described as reasonable.
Compared to the rest of the industry, the Price/Forward Earnings ratio of THG is on the same level as its industry peers.
Compared to an average S&P500 Price/Forward Earnings ratio of 22.13, THG is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 12.33 | ||
| Fwd PE | 10.75 |
4.2 Price Multiples
THG's Enterprise Value to EBITDA ratio is in line with the industry average.
THG's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 8.07 | ||
| EV/EBITDA | 11.4 |
4.3 Compensation for Growth
The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
PEG (NY)1.02
PEG (5Y)1.2
EPS Next 2Y10.26%
EPS Next 3Y8.87%
5. Dividend
5.1 Amount
THG has a Yearly Dividend Yield of 2.16%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 3.23, THG has a dividend in line with its industry peers.
THG's Dividend Yield is comparable with the S&P500 average which is at 2.40.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.16% |
5.2 History
The dividend of THG decreases each year by -18.55%.
THG has been paying a dividend for at least 10 years, so it has a reliable track record.
THG has not decreased its dividend in the last 3 years.
Dividend Growth(5Y)-18.55%
Div Incr Years3
Div Non Decr Years3
5.3 Sustainability
28.72% of the earnings are spent on dividend by THG. This is a low number and sustainable payout ratio.
DP28.72%
EPS Next 2Y10.26%
EPS Next 3Y8.87%
174.17
+1.83 (+1.06%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupInsurance
GICS IndustryInsurance
Earnings (Last)
Earnings (Next)
Inst Owners89.55%
Inst Owner Change3.28%
Ins Owners0.76%
Ins Owner Change3.71%
Market Cap6.27B
Analysts75
Price Target189.87 (9.01%)
Short Float %1.33%
Short Ratio1.72
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.16% |
Yearly Dividend3.46
Dividend Growth(5Y)-18.55%
DP28.72%
Div Incr Years3
Div Non Decr Years3
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)33.79%
Min EPS beat(2)11.06%
Max EPS beat(2)56.53%
EPS beat(4)4
Avg EPS beat(4)21.83%
Min EPS beat(4)0.55%
Max EPS beat(4)56.53%
EPS beat(8)6
Avg EPS beat(8)0.76%
EPS beat(12)9
Avg EPS beat(12)-4.54%
EPS beat(16)12
Avg EPS beat(16)-0.15%
Revenue beat(2)1
Avg Revenue beat(2)-1.45%
Min Revenue beat(2)-3.46%
Max Revenue beat(2)0.56%
Revenue beat(4)2
Avg Revenue beat(4)-0.83%
Min Revenue beat(4)-3.46%
Max Revenue beat(4)0.74%
Revenue beat(8)4
Avg Revenue beat(8)-1.16%
Revenue beat(12)7
Avg Revenue beat(12)0.37%
Revenue beat(16)10
Avg Revenue beat(16)1.31%
PT rev (1m)1.56%
PT rev (3m)3.58%
EPS NQ rev (1m)4.91%
EPS NQ rev (3m)5.56%
EPS NY rev (1m)4.03%
EPS NY rev (3m)2.93%
Revenue NQ rev (1m)-0.61%
Revenue NQ rev (3m)-0.73%
Revenue NY rev (1m)-0.42%
Revenue NY rev (3m)-0.93%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 12.33 | ||
| Fwd PE | 10.75 | ||
| P/S | 1 | ||
| P/FCF | 8.07 | ||
| P/OCF | 7.97 | ||
| P/B | 2.06 | ||
| P/tB | 2.19 | ||
| EV/EBITDA | 11.4 |
EPS(TTM)14.12
EY8.11%
EPS(NY)16.21
Fwd EY9.3%
FCF(TTM)21.59
FCFY12.39%
OCF(TTM)21.85
OCFY12.54%
SpS174.64
BVpS84.57
TBVpS79.6
PEG (NY)1.02
PEG (5Y)1.2
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.84% | ||
| ROE | 14.41% | ||
| ROCE | 3.95% | ||
| ROIC | 3.16% | ||
| ROICexc | 3.23% | ||
| ROICexgc | 3.99% | ||
| OM | 9.29% | ||
| PM (TTM) | 6.98% | ||
| GM | N/A | ||
| FCFM | 12.36% |
ROA(3y)1.29%
ROA(5y)1.89%
ROE(3y)7.13%
ROE(5y)9.18%
ROIC(3y)1.75%
ROIC(5y)2.21%
ROICexc(3y)1.8%
ROICexc(5y)2.25%
ROICexgc(3y)2.25%
ROICexgc(5y)2.82%
ROCE(3y)2.19%
ROCE(5y)2.75%
ROICexcg growth 3Y5.67%
ROICexcg growth 5Y0.09%
ROICexc growth 3Y6.4%
ROICexc growth 5Y0.53%
OM growth 3Y1.9%
OM growth 5Y-0.99%
PM growth 3Y-5.85%
PM growth 5Y-5.09%
GM growth 3YN/A
GM growth 5YN/A
F-Score8
Asset Turnover0.41
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.26 | ||
| Debt/FCF | 1.01 | ||
| Debt/EBITDA | 1.34 | ||
| Cap/Depr | 626.67% | ||
| Cap/Sales | 0.15% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 134.31% | ||
| Profit Quality | 177.14% | ||
| Current Ratio | N/A | ||
| Quick Ratio | N/A | ||
| Altman-Z | N/A |
F-Score8
WACC8.48%
ROIC/WACC0.37
Cap/Depr(3y)335.62%
Cap/Depr(5y)227.22%
Cap/Sales(3y)0.23%
Cap/Sales(5y)0.23%
Profit Quality(3y)595.01%
Profit Quality(5y)434.59%
High Growth Momentum
Growth
EPS 1Y (TTM)214.48%
EPS 3Y15.11%
EPS 5Y10.31%
EPS Q2Q%25.65%
EPS Next Y12.07%
EPS Next 2Y10.26%
EPS Next 3Y8.87%
EPS Next 5YN/A
Revenue 1Y (TTM)3.13%
Revenue growth 3Y6.83%
Revenue growth 5Y5.41%
Sales Q2Q%3.91%
Revenue Next Year6.49%
Revenue Next 2Y6.11%
Revenue Next 3Y6.56%
Revenue Next 5YN/A
EBIT growth 1Y150.79%
EBIT growth 3Y8.85%
EBIT growth 5Y4.37%
EBIT Next YearN/A
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y48.33%
FCF growth 3Y-0.83%
FCF growth 5Y6.06%
OCF growth 1Y45.57%
OCF growth 3Y-0.73%
OCF growth 5Y5.86%