HANOVER INSURANCE GROUP INC/ (THG) Stock Fundamental Analysis
NYSE:THG - New York Stock Exchange, Inc. - US4108671052 - Common Stock - Currency: USD
We assign a fundamental rating of 4 out of 10 to THG. THG was compared to 141 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 has a correct valuation and a medium 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.
Each year in the past 5 years THG has been profitable.
Each year in the past 5 years THG had a positive operating cash flow.
1.2 Ratios
With a decent Return On Assets value of 2.84%, THG is doing good in the industry, outperforming 64.54% of the companies in the same industry.
With a decent Return On Equity value of 14.41%, THG is doing good in the industry, outperforming 70.21% of the companies in the same industry.
The Return On Invested Capital of THG (3.16%) is better than 67.38% of its industry peers.
The Average Return On Invested Capital over the past 3 years for THG is below the industry average of 4.08%.
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
Looking at the Profit Margin, with a value of 6.98%, THG is in line with its industry, outperforming 47.52% of the companies in the same industry.
In the last couple of years the Profit Margin of THG has declined.
THG's Operating Margin of 9.29% is in line compared to the rest of the industry. THG outperforms 43.97% of its industry peers.
In the last couple of years the Operating Margin of THG has remained more or less at the same level.
| 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.
Compared to 1 year ago, THG has more shares outstanding
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
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.
The Debt to FCF ratio of THG (1.01) is better than 66.67% of its industry peers.
THG has a Debt/Equity ratio of 0.26. This is a healthy value indicating a solid balance between debt and equity.
THG has a Debt to Equity ratio of 0.26. This is in the better half of the industry: THG outperforms 63.12% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.26 | ||
| Debt/FCF | 1.01 | ||
| Altman-Z | N/A |
ROIC/WACC0.38
WACC8.32%
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 100.36% over the past year.
THG shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 10.31% yearly.
Looking at the last year, THG shows a small growth in Revenue. The Revenue has grown by 4.39% in the last year.
The Revenue has been growing slightly by 5.41% on average over the past years.
EPS 1Y (TTM)100.36%
EPS 3Y15.11%
EPS 5Y10.31%
EPS Q2Q%131.38%
Revenue 1Y (TTM)4.39%
Revenue growth 3Y6.83%
Revenue growth 5Y5.41%
Sales Q2Q%4.12%
3.2 Future
The Earnings Per Share is expected to grow by 8.87% on average over the next years. This is quite good.
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.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 10.48 indicates a reasonable valuation of THG.
THG's Price/Earnings ratio is a bit cheaper when compared to the industry. THG is cheaper than 60.28% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 26.84. THG is valued rather cheaply when compared to this.
A Price/Forward Earnings ratio of 10.72 indicates a reasonable valuation of THG.
THG's Price/Forward Earnings is on the same level as the industry average.
THG's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 34.94.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.48 | ||
| Fwd PE | 10.72 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as THG.
THG's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 8.04 | ||
| EV/EBITDA | 11.29 |
4.3 Compensation for Growth
The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
PEG (NY)0.84
PEG (5Y)1.02
EPS Next 2Y10.31%
EPS Next 3Y8.87%
5. Dividend
5.1 Amount
THG has a Yearly Dividend Yield of 2.10%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 3.59, THG has a dividend in line with its industry peers.
Compared to an average S&P500 Dividend Yield of 2.36, THG has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.1% |
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
THG pays out 28.72% of its income as dividend. This is a sustainable payout ratio.
DP28.72%
EPS Next 2Y10.31%
EPS Next 3Y8.87%
173.86
+1.2 (+0.7%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupInsurance
GICS IndustryInsurance
Earnings (Last)
Earnings (Next)
Inst Owners90.3%
Inst Owner Change-3.86%
Ins Owners0.85%
Ins Owner Change3.61%
Market Cap6.25B
Analysts76.67
Price Target199.92 (14.99%)
Short Float %1.4%
Short Ratio1.94
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.1% |
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)4.57%
PT rev (3m)5.3%
EPS NQ rev (1m)1.53%
EPS NQ rev (3m)5.31%
EPS NY rev (1m)0%
EPS NY rev (3m)0.35%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-0.37%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-0.52%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.48 | ||
| Fwd PE | 10.72 | ||
| P/S | 0.99 | ||
| P/FCF | 8.04 | ||
| P/OCF | 7.94 | ||
| P/B | 2.05 | ||
| P/tB | 2.18 | ||
| EV/EBITDA | 11.29 |
EPS(TTM)16.59
EY9.54%
EPS(NY)16.22
Fwd EY9.33%
FCF(TTM)21.63
FCFY12.44%
OCF(TTM)21.9
OCFY12.59%
SpS175.03
BVpS84.76
TBVpS79.78
PEG (NY)0.84
PEG (5Y)1.02
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
WACC8.32%
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)100.36%
EPS 3Y15.11%
EPS 5Y10.31%
EPS Q2Q%131.38%
EPS Next Y12.46%
EPS Next 2Y10.31%
EPS Next 3Y8.87%
EPS Next 5YN/A
Revenue 1Y (TTM)4.39%
Revenue growth 3Y6.83%
Revenue growth 5Y5.41%
Sales Q2Q%4.12%
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%