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 145 industry peers in the Insurance industry. THG has a medium profitability rating, but doesn't score so well on its financial health evaluation. THG is not valued too expensively and it also shows a decent growth rate.
1. Profitability
1.1 Basic Checks
In the past year THG was profitable.
THG had a positive operating cash flow in the past year.
THG had positive earnings in each of the past 5 years.
In the past 5 years THG always reported a positive cash flow from operatings.
1.2 Ratios
THG has a Return On Assets of 2.84%. This is in the better half of the industry: THG outperforms 66.90% of its industry peers.
THG has a Return On Equity of 14.41%. This is in the better half of the industry: THG outperforms 71.72% of its industry peers.
THG's Return On Invested Capital of 3.16% is fine compared to the rest of the industry. THG outperforms 67.59% of its industry peers.
THG had an Average Return On Invested Capital over the past 3 years of 1.75%. This is below the industry average of 4.07%.
The 3 year average ROIC (1.75%) for THG is below the current ROIC(3.16%), indicating increased profibility in the last year.
| 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
The Profit Margin of THG (6.98%) is comparable to the rest of the industry.
THG's Profit Margin has declined in the last couple of years.
THG has a Operating Margin of 9.29%. This is comparable to the rest of the industry: THG outperforms 46.90% of 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
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), THG is destroying value.
THG has more shares outstanding than it did 1 year ago.
Compared to 5 years ago, THG has less shares outstanding
The debt/assets ratio for THG has been reduced compared to a year ago.
2.2 Solvency
THG has a debt to FCF ratio of 1.01. This is a very positive value and a sign of high solvency as it would only need 1.01 years to pay back of all of its debts.
THG's Debt to FCF ratio of 1.01 is fine compared to the rest of the industry. THG outperforms 65.52% of its industry peers.
A Debt/Equity ratio of 0.26 indicates that THG is not too dependend on debt financing.
THG's Debt to Equity ratio of 0.26 is fine compared to the rest of the industry. THG outperforms 64.14% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.26 | ||
| Debt/FCF | 1.01 | ||
| Altman-Z | N/A |
ROIC/WACC0.38
WACC8.4%
2.3 Liquidity
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | N/A | ||
| Quick Ratio | N/A |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 214.48% over the past year.
The Earnings Per Share has been growing by 10.31% on average over the past years. This is quite good.
THG shows a small growth in Revenue. In the last year, the Revenue has grown by 3.13%.
Measured over the past years, THG shows a small growth in Revenue. The Revenue has been growing by 5.41% on average per year.
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 Y12.46%
EPS Next 2Y10.31%
EPS Next 3Y8.87%
EPS Next 5YN/A
Revenue Next Year5.94%
Revenue Next 2Y6.05%
Revenue Next 3Y6.56%
Revenue Next 5YN/A
3.3 Evolution
The EPS growth rate is stable: in the next years the growth will be about the same than in the last years.
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 11.58, the valuation of THG can be described as reasonable.
Compared to the rest of the industry, the Price/Earnings ratio of THG is on the same level as its industry peers.
The average S&P500 Price/Earnings ratio is at 27.41. THG is valued rather cheaply when compared to this.
THG is valuated reasonably with a Price/Forward Earnings ratio of 10.08.
Compared to the rest of the industry, the Price/Forward Earnings ratio of THG is on the same level as its industry peers.
The average S&P500 Price/Forward Earnings ratio is at 35.19. THG is valued rather cheaply when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.58 | ||
| Fwd PE | 10.08 |
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 | 7.55 | ||
| EV/EBITDA | 10.72 |
4.3 Compensation for Growth
THG's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
PEG (NY)0.93
PEG (5Y)1.12
EPS Next 2Y10.31%
EPS Next 3Y8.87%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.20%, THG has a reasonable but not impressive dividend return.
THG's Dividend Yield is comparable with the industry average which is at 3.76.
Compared to an average S&P500 Dividend Yield of 2.35, THG has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.2% |
5.2 History
The dividend of THG decreases each year by -18.55%.
THG has paid a dividend for at least 10 years, which is a reliable track record.
THG has not decreased its dividend in the last 3 years.
Dividend Growth(5Y)-18.55%
Div Incr Years4
Div Non Decr Years4
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 2Y10.31%
EPS Next 3Y8.87%
163.44
-0.05 (-0.03%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupInsurance
GICS IndustryInsurance
Earnings (Last)
Earnings (Next)
Inst Owners90.29%
Inst Owner Change-0.01%
Ins Owners0.85%
Ins Owner Change3.79%
Market Cap5.87B
Analysts75
Price Target191.18 (16.97%)
Short Float %1.78%
Short Ratio2.7
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.2% |
Yearly Dividend3.46
Dividend Growth(5Y)-18.55%
DP28.72%
Div Incr Years4
Div Non Decr Years4
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)0%
PT rev (3m)2.26%
EPS NQ rev (1m)2.91%
EPS NQ rev (3m)8.82%
EPS NY rev (1m)0.35%
EPS NY rev (3m)3.24%
Revenue NQ rev (1m)-0.37%
Revenue NQ rev (3m)-0.98%
Revenue NY rev (1m)-0.52%
Revenue NY rev (3m)-0.94%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.58 | ||
| Fwd PE | 10.08 | ||
| P/S | 0.93 | ||
| P/FCF | 7.55 | ||
| P/OCF | 7.46 | ||
| P/B | 1.93 | ||
| P/tB | 2.05 | ||
| EV/EBITDA | 10.72 |
EPS(TTM)14.12
EY8.64%
EPS(NY)16.22
Fwd EY9.92%
FCF(TTM)21.63
FCFY13.24%
OCF(TTM)21.9
OCFY13.4%
SpS175.03
BVpS84.76
TBVpS79.78
PEG (NY)0.93
PEG (5Y)1.12
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
WACC8.4%
ROIC/WACC0.38
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 Y12.46%
EPS Next 2Y10.31%
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 Year5.94%
Revenue Next 2Y6.05%
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%