AMERICAN FINANCIAL GROUP INC (AFG) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:AFG - US0259321042 - Common Stock
128.02 USD
+0.23 (+0.18%)
128.02 USD
0 (0%)
Overall AFG gets a fundamental rating of 5 out of 10. We evaluated AFG against 148 industry peers in the Insurance industry. AFG has an excellent financial health rating, but there are some minor concerns on its profitability. AFG has a correct valuation and a medium growth rate.
1. Profitability
1.1 Basic Checks
- AFG had positive earnings in the past year.
- In the past year AFG had a positive cash flow from operations.
- In the past 5 years AFG has always been profitable.
- Each year in the past 5 years AFG had a positive operating cash flow.
1.2 Ratios
- Looking at the Return On Assets, with a value of 2.36%, AFG is in line with its industry, outperforming 54.73% of the companies in the same industry.
- AFG has a better Return On Equity (16.87%) than 74.32% of its industry peers.
- AFG has a Return On Invested Capital (2.38%) which is in line with its industry peers.
- AFG had an Average Return On Invested Capital over the past 3 years of 2.95%. This is significantly below the industry average of 14.94%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.36% | ||
| ROE | 16.87% | ||
| ROIC | 2.38% |
ROA(3y)2.95%
ROA(5y)3.35%
ROE(3y)20.68%
ROE(5y)22.52%
ROIC(3y)2.95%
ROIC(5y)2.64%
1.3 Margins
- With a Profit Margin value of 9.70%, AFG perfoms like the industry average, outperforming 57.43% of the companies in the same industry.
- AFG's Profit Margin has been stable in the last couple of years.
- With a Operating Margin value of 12.28%, AFG perfoms like the industry average, outperforming 47.97% of the companies in the same industry.
- AFG's Operating Margin has declined in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 12.28% | ||
| PM (TTM) | 9.7% | ||
| GM | N/A |
OM growth 3Y-15.95%
OM growth 5Y-2.25%
PM growth 3Y-29.55%
PM growth 5Y-0.39%
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), AFG is destroying value.
- Compared to 1 year ago, AFG has more shares outstanding
- The number of shares outstanding for AFG has been reduced compared to 5 years ago.
- AFG has a better debt/assets ratio than last year.
2.2 Solvency
- Based on the Altman-Z score of 0.76, we must say that AFG is in the distress zone and has some risk of bankruptcy.
- The Altman-Z score of AFG (0.76) is better than 77.03% of its industry peers.
- AFG has a debt to FCF ratio of 1.41. This is a very positive value and a sign of high solvency as it would only need 1.41 years to pay back of all of its debts.
- With a Debt to FCF ratio value of 1.41, AFG perfoms like the industry average, outperforming 57.43% of the companies in the same industry.
- AFG has a Debt/Equity ratio of 0.38. This is a healthy value indicating a solid balance between debt and equity.
- The Debt to Equity ratio of AFG (0.38) is worse than 60.81% of its industry peers.
- Even though the debt/equity ratio score it not favorable for AFG, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.38 | ||
| Debt/FCF | 1.41 | ||
| Altman-Z | 0.76 |
ROIC/WACC0.29
WACC8.28%
2.3 Liquidity
- A Current Ratio of 9.26 indicates that AFG has no problem at all paying its short term obligations.
- AFG has a Current ratio of 9.26. This is amongst the best in the industry. AFG outperforms 96.62% of its industry peers.
- AFG has a Quick Ratio of 9.26. This indicates that AFG is financially healthy and has no problem in meeting its short term obligations.
- With an excellent Quick ratio value of 9.26, AFG belongs to the best of the industry, outperforming 96.62% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 9.26 | ||
| Quick Ratio | 9.26 |
3. Growth
3.1 Past
- AFG shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -6.78%.
- Measured over the past 5 years, AFG shows a small growth in Earnings Per Share. The EPS has been growing by 4.54% on average per year.
- AFG shows a small growth in Revenue. In the last year, the Revenue has grown by 0.13%.
- The Revenue has been growing slightly by 0.16% on average over the past years.
EPS 1Y (TTM)-6.78%
EPS 3Y-2.5%
EPS 5Y4.54%
EPS Q2Q%16.45%
Revenue 1Y (TTM)0.13%
Revenue growth 3Y8.33%
Revenue growth 5Y0.16%
Sales Q2Q%-2.04%
3.2 Future
- Based on estimates for the next years, AFG will show a small growth in Earnings Per Share. The EPS will grow by 5.73% on average per year.
- The Revenue is expected to grow by 3.36% on average over the next years.
EPS Next Y-6.43%
EPS Next 2Y3.38%
EPS Next 3Y4.65%
EPS Next 5Y5.73%
Revenue Next Year0.56%
Revenue Next 2Y2.73%
Revenue Next 3Y3.21%
Revenue Next 5Y3.36%
3.3 Evolution
- The EPS growth rate is accelerating: in the next years the growth will be better 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
- With a Price/Earnings ratio of 13.12, AFG is valued correctly.
- Compared to the rest of the industry, the Price/Earnings ratio of AFG is on the same level as its industry peers.
- The average S&P500 Price/Earnings ratio is at 27.25. AFG is valued rather cheaply when compared to this.
- The Price/Forward Earnings ratio is 11.14, which indicates a very decent valuation of AFG.
- The rest of the industry has a similar Price/Forward Earnings ratio as AFG.
- AFG is valuated cheaply when we compare the Price/Forward Earnings ratio to 25.98, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.12 | ||
| Fwd PE | 11.14 |
4.2 Price Multiples
- AFG's Enterprise Value to EBITDA is on the same level as the industry average.
- The rest of the industry has a similar Price/Free Cash Flow ratio as AFG.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 8.27 | ||
| EV/EBITDA | 9.73 |
4.3 Compensation for Growth
PEG (NY)N/A
PEG (5Y)2.89
EPS Next 2Y3.38%
EPS Next 3Y4.65%
5. Dividend
5.1 Amount
- With a Yearly Dividend Yield of 2.74%, AFG has a reasonable but not impressive dividend return.
- AFG's Dividend Yield is a higher than the industry average which is at 2.41.
- Compared to an average S&P500 Dividend Yield of 1.82, AFG pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.74% |
5.2 History
- On average, the dividend of AFG grows each year by 13.64%, which is quite nice.
- AFG has paid a dividend for at least 10 years, which is a reliable track record.
- The dividend of AFG decreased recently.
Dividend Growth(5Y)13.64%
Div Incr Years1
Div Non Decr Years1
5.3 Sustainability
- 96.49% of the earnings are spent on dividend by AFG. This is not a sustainable payout ratio.
- AFG's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP96.49%
EPS Next 2Y3.38%
EPS Next 3Y4.65%
AMERICAN FINANCIAL GROUP INC / AFG FAQ
What is the ChartMill fundamental rating of AMERICAN FINANCIAL GROUP INC (AFG) stock?
ChartMill assigns a fundamental rating of 5 / 10 to AFG.
What is the valuation status of AMERICAN FINANCIAL GROUP INC (AFG) stock?
ChartMill assigns a valuation rating of 4 / 10 to AMERICAN FINANCIAL GROUP INC (AFG). This can be considered as Fairly Valued.
What is the profitability of AFG stock?
AMERICAN FINANCIAL GROUP INC (AFG) has a profitability rating of 4 / 10.
What is the valuation of AMERICAN FINANCIAL GROUP INC based on its PE and PB ratios?
The Price/Earnings (PE) ratio for AMERICAN FINANCIAL GROUP INC (AFG) is 13.12 and the Price/Book (PB) ratio is 2.26.
What is the expected EPS growth for AMERICAN FINANCIAL GROUP INC (AFG) stock?
The Earnings per Share (EPS) of AMERICAN FINANCIAL GROUP INC (AFG) is expected to decline by -6.43% in the next year.