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. While THG is still in line with the averages on profitability rating, there are concerns on its financial health. 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.
In the past 5 years THG has always been profitable.
THG had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
Looking at the Return On Assets, with a value of 2.79%, THG is in the better half of the industry, outperforming 61.54% of the companies in the same industry.
The Return On Equity of THG (14.99%) is better than 63.64% of its industry peers.
THG has a Return On Invested Capital of 3.12%. This is in the better half of the industry: THG outperforms 62.94% of its industry peers.
The Average Return On Invested Capital over the past 3 years for THG is below the industry average of 4.47%.
The 3 year average ROIC (1.75%) for THG is below the current ROIC(3.12%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.79% | ||
| ROE | 14.99% | ||
| ROIC | 3.12% |
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
THG has a Profit Margin of 6.84%. This is comparable to the rest of the industry: THG outperforms 50.35% of its industry peers.
THG's Profit Margin has declined in the last couple of years.
With a Operating Margin value of 9.05%, THG perfoms like the industry average, outperforming 43.36% of the companies in the same industry.
THG's Operating Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 9.05% | ||
| PM (TTM) | 6.84% | ||
| 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
THG has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
Compared to 1 year ago, THG has more shares outstanding
The number of shares outstanding for THG has been reduced compared to 5 years ago.
Compared to 1 year ago, THG has an improved debt to assets ratio.
2.2 Solvency
THG has a debt to FCF ratio of 0.99. This is a very positive value and a sign of high solvency as it would only need 0.99 years to pay back of all of its debts.
THG has a better Debt to FCF ratio (0.99) than 61.54% of its industry peers.
THG has a Debt/Equity ratio of 0.28. This is a healthy value indicating a solid balance between debt and equity.
THG has a better Debt to Equity ratio (0.28) than 61.54% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.28 | ||
| Debt/FCF | 0.99 | ||
| Altman-Z | N/A |
ROIC/WACC0.37
WACC8.34%
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.
THG shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 10.31% yearly.
The Revenue has been growing slightly by 3.52% in the past year.
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)3.52%
Revenue growth 3Y6.83%
Revenue growth 5Y5.41%
Sales Q2Q%11.49%
3.2 Future
Based on estimates for the next years, THG will show a quite strong growth in Earnings Per Share. The EPS will grow by 8.33% on average per year.
THG is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 6.56% yearly.
EPS Next Y7.73%
EPS Next 2Y10.24%
EPS Next 3Y8.33%
EPS Next 5YN/A
Revenue Next Year6.94%
Revenue Next 2Y6.43%
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
THG is valuated correctly with a Price/Earnings ratio of 12.06.
THG's Price/Earnings is on the same level as the industry average.
THG is valuated cheaply when we compare the Price/Earnings ratio to 28.22, which is the current average of the S&P500 Index.
THG is valuated reasonably with a Price/Forward Earnings ratio of 10.51.
THG's Price/Forward Earnings ratio is in line with the industry average.
The average S&P500 Price/Forward Earnings ratio is at 20.86. THG is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 12.06 | ||
| Fwd PE | 10.51 |
4.2 Price Multiples
THG's Enterprise Value to EBITDA ratio is in line with the industry average.
62.24% of the companies in the same industry are more expensive than THG, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 7.72 | ||
| EV/EBITDA | 11.31 |
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)1.56
PEG (5Y)1.17
EPS Next 2Y10.24%
EPS Next 3Y8.33%
5. Dividend
5.1 Amount
THG has a Yearly Dividend Yield of 2.17%.
Compared to an average industry Dividend Yield of 3.27, THG has a dividend in line with its industry peers.
Compared to an average S&P500 Dividend Yield of 2.44, THG has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.17% |
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 Years3
Div Non Decr Years3
5.3 Sustainability
THG pays out 29.13% of its income as dividend. This is a sustainable payout ratio.
DP29.13%
EPS Next 2Y10.24%
EPS Next 3Y8.33%
170.34
+4.75 (+2.87%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupInsurance
GICS IndustryInsurance
Earnings (Last)
Earnings (Next)
Inst Owners89.55%
Inst Owner Change0.19%
Ins Owners0.76%
Ins Owner Change0.66%
Market Cap6.14B
Analysts75
Price Target186.51 (9.49%)
Short Float %1.14%
Short Ratio1.5
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.17% |
Yearly Dividend3.46
Dividend Growth(5Y)-18.55%
DP29.13%
Div Incr Years3
Div Non Decr Years3
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)37.85%
Min EPS beat(2)19.17%
Max EPS beat(2)56.53%
EPS beat(4)4
Avg EPS beat(4)22.22%
Min EPS beat(4)0.55%
Max EPS beat(4)56.53%
EPS beat(8)5
Avg EPS beat(8)-9.14%
EPS beat(12)9
Avg EPS beat(12)-5%
EPS beat(16)12
Avg EPS beat(16)4.02%
Revenue beat(2)1
Avg Revenue beat(2)-0.3%
Min Revenue beat(2)-1.16%
Max Revenue beat(2)0.56%
Revenue beat(4)2
Avg Revenue beat(4)-0.41%
Min Revenue beat(4)-1.76%
Max Revenue beat(4)0.74%
Revenue beat(8)5
Avg Revenue beat(8)-0.53%
Revenue beat(12)8
Avg Revenue beat(12)1.18%
Revenue beat(16)11
Avg Revenue beat(16)1.87%
PT rev (1m)1.75%
PT rev (3m)5.09%
EPS NQ rev (1m)-4.74%
EPS NQ rev (3m)0.53%
EPS NY rev (1m)-1.1%
EPS NY rev (3m)4.38%
Revenue NQ rev (1m)-0.19%
Revenue NQ rev (3m)1.43%
Revenue NY rev (1m)-0.27%
Revenue NY rev (3m)1.3%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 12.06 | ||
| Fwd PE | 10.51 | ||
| P/S | 0.99 | ||
| P/FCF | 7.72 | ||
| P/OCF | 7.62 | ||
| P/B | 2.16 | ||
| P/tB | 2.31 | ||
| EV/EBITDA | 11.31 |
EPS(TTM)14.12
EY8.29%
EPS(NY)16.2
Fwd EY9.51%
FCF(TTM)22.08
FCFY12.96%
OCF(TTM)22.36
OCFY13.13%
SpS172.84
BVpS78.85
TBVpS73.89
PEG (NY)1.56
PEG (5Y)1.17
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.79% | ||
| ROE | 14.99% | ||
| ROCE | 3.9% | ||
| ROIC | 3.12% | ||
| ROICexc | 3.22% | ||
| ROICexgc | 3.99% | ||
| OM | 9.05% | ||
| PM (TTM) | 6.84% | ||
| GM | N/A | ||
| FCFM | 12.77% |
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 | 0.28 | ||
| Debt/FCF | 0.99 | ||
| Debt/EBITDA | 1.39 | ||
| Cap/Depr | 680% | ||
| Cap/Sales | 0.16% | ||
| Interest Coverage | 16.97 | ||
| Cash Conversion | 142.62% | ||
| Profit Quality | 186.76% | ||
| Current Ratio | N/A | ||
| Quick Ratio | N/A | ||
| Altman-Z | N/A |
F-Score8
WACC8.34%
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 Y7.73%
EPS Next 2Y10.24%
EPS Next 3Y8.33%
EPS Next 5YN/A
Revenue 1Y (TTM)3.52%
Revenue growth 3Y6.83%
Revenue growth 5Y5.41%
Sales Q2Q%11.49%
Revenue Next Year6.94%
Revenue Next 2Y6.43%
Revenue Next 3Y6.56%
Revenue Next 5YN/A
EBIT growth 1Y470.34%
EBIT growth 3Y8.85%
EBIT growth 5Y4.37%
EBIT Next YearN/A
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y127.44%
FCF growth 3Y-0.83%
FCF growth 5Y6.06%
OCF growth 1Y122.78%
OCF growth 3Y-0.73%
OCF growth 5Y5.86%