AMERICAN FINANCIAL GROUP INC (AFG) Stock Fundamental Analysis
NYSE:AFG - New York Stock Exchange, Inc. - US0259321042 - Common Stock - Currency: USD
We assign a fundamental rating of 5 out of 10 to AFG. AFG was compared to 145 industry peers in the Insurance industry. Both the profitability and the financial health of AFG get a neutral evaluation. Nothing too spectacular is happening here. AFG has a decent growth rate and is not valued too expensively.
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.
AFG had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
The Return On Assets of AFG (2.64%) is comparable to the rest of the industry.
Looking at the Return On Equity, with a value of 18.19%, AFG belongs to the top of the industry, outperforming 83.45% of the companies in the same industry.
Looking at the Return On Invested Capital, with a value of 2.66%, AFG is in line with its industry, outperforming 54.48% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for AFG is in line with the industry average of 4.07%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.64% | ||
| ROE | 18.19% | ||
| ROIC | 2.66% |
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
AFG has a Profit Margin of 9.71%. This is in the better half of the industry: AFG outperforms 65.52% of its industry peers.
AFG's Profit Margin has been stable in the last couple of years.
The Operating Margin of AFG (12.29%) is comparable to the rest of the industry.
In the last couple of years the Operating Margin of AFG has declined.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 12.29% | ||
| PM (TTM) | 9.71% | ||
| 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
AFG has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
The number of shares outstanding for AFG has been increased compared to 1 year ago.
The number of shares outstanding for AFG has been reduced compared to 5 years ago.
Compared to 1 year ago, AFG has an improved debt to assets ratio.
2.2 Solvency
Based on the Altman-Z score of 0.80, we must say that AFG is in the distress zone and has some risk of bankruptcy.
Looking at the Altman-Z score, with a value of 0.80, AFG is in the better half of the industry, outperforming 79.31% of the companies in the same industry.
The Debt to FCF ratio of AFG is 1.16, which is an excellent value as it means it would take AFG, only 1.16 years of fcf income to pay off all of its debts.
AFG has a Debt to FCF ratio (1.16) which is comparable to the rest of the industry.
A Debt/Equity ratio of 0.34 indicates that AFG is not too dependend on debt financing.
AFG has a Debt to Equity ratio (0.34) which is in line with its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.34 | ||
| Debt/FCF | 1.16 | ||
| Altman-Z | 0.8 |
ROIC/WACC0.32
WACC8.37%
2.3 Liquidity
AFG has a Current Ratio of 3.75. This indicates that AFG is financially healthy and has no problem in meeting its short term obligations.
Looking at the Current ratio, with a value of 3.75, AFG belongs to the top of the industry, outperforming 95.86% of the companies in the same industry.
AFG has a Quick Ratio of 3.75. This indicates that AFG is financially healthy and has no problem in meeting its short term obligations.
AFG has a Quick ratio of 3.75. This is amongst the best in the industry. AFG outperforms 95.86% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 3.75 | ||
| Quick Ratio | 3.75 |
3. Growth
3.1 Past
The earnings per share for AFG have decreased by -6.04% in the last year.
The Earnings Per Share has been growing slightly by 4.54% on average over the past years.
The Revenue has been growing slightly by 2.87% in the past year.
Measured over the past years, AFG shows a small growth in Revenue. The Revenue has been growing by 0.16% on average per year.
EPS 1Y (TTM)-6.04%
EPS 3Y-2.5%
EPS 5Y4.54%
EPS Q2Q%-34.42%
Revenue 1Y (TTM)2.87%
Revenue growth 3Y8.33%
Revenue growth 5Y0.16%
Sales Q2Q%2.2%
3.2 Future
AFG is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 4.22% yearly.
AFG is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 2.54% yearly.
EPS Next Y-3.81%
EPS Next 2Y5.4%
EPS Next 3Y4.22%
EPS Next 5YN/A
Revenue Next Year0.44%
Revenue Next 2Y3.38%
Revenue Next 3Y2.54%
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
AFG is valuated correctly with a Price/Earnings ratio of 12.89.
AFG's Price/Earnings ratio is in line with the industry average.
When comparing the Price/Earnings ratio of AFG to the average of the S&P500 Index (27.30), we can say AFG is valued rather cheaply.
The Price/Forward Earnings ratio is 10.58, which indicates a very decent valuation of AFG.
AFG's Price/Forward Earnings is on the same level as the industry average.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.76, AFG is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 12.89 | ||
| Fwd PE | 10.58 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of AFG is on the same level as its industry peers.
AFG's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 8.33 | ||
| EV/EBITDA | 9.93 |
4.3 Compensation for Growth
PEG (NY)N/A
PEG (5Y)2.84
EPS Next 2Y5.4%
EPS Next 3Y4.22%
5. Dividend
5.1 Amount
AFG has a Yearly Dividend Yield of 6.71%, which is a nice return.
Compared to an average industry Dividend Yield of 3.64, AFG pays a better dividend. On top of this AFG pays more dividend than 90.34% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.37, AFG pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 6.71% |
5.2 History
The dividend of AFG is nicely growing with an annual growth rate of 13.64%!
AFG has been paying a dividend for at least 10 years, so it has 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
94.24% of the earnings are spent on dividend by AFG. This is not a sustainable payout ratio.
The dividend of AFG is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP94.24%
EPS Next 2Y5.4%
EPS Next 3Y4.22%
126.32
-1.44 (-1.13%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupInsurance
GICS IndustryInsurance
Earnings (Last)
Earnings (Next)
Inst Owners66.31%
Inst Owner Change0%
Ins Owners17.94%
Ins Owner Change2.83%
Market Cap10.55B
Analysts70.91
Price Target134.84 (6.74%)
Short Float %2.3%
Short Ratio3.28
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 6.71% |
Yearly Dividend9.4
Dividend Growth(5Y)13.64%
DP94.24%
Div Incr Years1
Div Non Decr Years1
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-6.01%
Min EPS beat(2)-11.61%
Max EPS beat(2)-0.4%
EPS beat(4)1
Avg EPS beat(4)-3.94%
Min EPS beat(4)-11.61%
Max EPS beat(4)3.61%
EPS beat(8)2
Avg EPS beat(8)-4.36%
EPS beat(12)5
Avg EPS beat(12)-0.06%
EPS beat(16)9
Avg EPS beat(16)9.47%
Revenue beat(2)1
Avg Revenue beat(2)-1.8%
Min Revenue beat(2)-10.18%
Max Revenue beat(2)6.57%
Revenue beat(4)2
Avg Revenue beat(4)0.02%
Min Revenue beat(4)-10.18%
Max Revenue beat(4)11.93%
Revenue beat(8)4
Avg Revenue beat(8)-0.4%
Revenue beat(12)7
Avg Revenue beat(12)3.8%
Revenue beat(16)11
Avg Revenue beat(16)7.9%
PT rev (1m)-0.45%
PT rev (3m)-3.08%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-10.84%
EPS NY rev (1m)-1.19%
EPS NY rev (3m)-2.06%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-1.05%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-4.63%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 12.89 | ||
| Fwd PE | 10.58 | ||
| P/S | 1.28 | ||
| P/FCF | 8.33 | ||
| P/OCF | 7.61 | ||
| P/B | 2.4 | ||
| P/tB | 2.71 | ||
| EV/EBITDA | 9.93 |
EPS(TTM)9.8
EY7.76%
EPS(NY)11.94
Fwd EY9.45%
FCF(TTM)15.17
FCFY12.01%
OCF(TTM)16.61
OCFY13.15%
SpS98.55
BVpS52.59
TBVpS46.56
PEG (NY)N/A
PEG (5Y)2.84
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.64% | ||
| ROE | 18.19% | ||
| ROCE | 3.37% | ||
| ROIC | 2.66% | ||
| ROICexc | 2.78% | ||
| ROICexgc | 3.05% | ||
| OM | 12.29% | ||
| PM (TTM) | 9.71% | ||
| GM | N/A | ||
| FCFM | 15.39% |
ROA(3y)2.95%
ROA(5y)3.35%
ROE(3y)20.68%
ROE(5y)22.52%
ROIC(3y)2.95%
ROIC(5y)2.64%
ROICexc(3y)3.07%
ROICexc(5y)2.78%
ROICexgc(3y)3.35%
ROICexgc(5y)3.01%
ROCE(3y)3.73%
ROCE(5y)3.34%
ROICexcg growth 3Y-11.18%
ROICexcg growth 5Y16.37%
ROICexc growth 3Y-11.66%
ROICexc growth 5Y15.82%
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
F-Score6
Asset Turnover0.27
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.34 | ||
| Debt/FCF | 1.16 | ||
| Debt/EBITDA | 1.35 | ||
| Cap/Depr | 144.58% | ||
| Cap/Sales | 1.46% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 126.67% | ||
| Profit Quality | 158.57% | ||
| Current Ratio | 3.75 | ||
| Quick Ratio | 3.75 | ||
| Altman-Z | 0.8 |
F-Score6
WACC8.37%
ROIC/WACC0.32
Cap/Depr(3y)114.17%
Cap/Depr(5y)79.15%
Cap/Sales(3y)1.25%
Cap/Sales(5y)1.15%
Profit Quality(3y)152.16%
Profit Quality(5y)165.86%
High Growth Momentum
Growth
EPS 1Y (TTM)-6.04%
EPS 3Y-2.5%
EPS 5Y4.54%
EPS Q2Q%-34.42%
EPS Next Y-3.81%
EPS Next 2Y5.4%
EPS Next 3Y4.22%
EPS Next 5YN/A
Revenue 1Y (TTM)2.87%
Revenue growth 3Y8.33%
Revenue growth 5Y0.16%
Sales Q2Q%2.2%
Revenue Next Year0.44%
Revenue Next 2Y3.38%
Revenue Next 3Y2.54%
Revenue Next 5YN/A
EBIT growth 1Y-8.99%
EBIT growth 3Y-8.95%
EBIT growth 5Y-2.09%
EBIT Next YearN/A
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y29.68%
FCF growth 3Y-14.88%
FCF growth 5Y-15.83%
OCF growth 1Y31.72%
OCF growth 3Y-12.4%
OCF growth 5Y-14.05%