HANOVER INSURANCE GROUP INC/ (THG) Stock Fundamental Analysis
NYSE:THG - New York Stock Exchange, Inc. - US4108671052 - Common Stock - Currency: USD
Overall THG gets a fundamental rating of 4 out of 10. We evaluated THG 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.
In the past year THG had a positive cash flow from operations.
THG had positive earnings in each of the past 5 years.
THG had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
THG's Return On Assets of 2.79% is fine compared to the rest of the industry. THG outperforms 62.24% of its industry peers.
THG's Return On Equity of 14.99% is fine compared to the rest of the industry. THG outperforms 61.54% of its industry peers.
THG has a better Return On Invested Capital (3.12%) than 62.94% 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 4.47%.
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
With a Profit Margin value of 6.84%, THG perfoms like the industry average, outperforming 50.35% of the companies in the same industry.
In the last couple of years the Profit Margin of THG has declined.
THG has a Operating Margin of 9.05%. This is comparable to the rest of the industry: THG outperforms 43.36% 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 | 9.05% | ||
| 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
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), THG is destroying value.
The number of shares outstanding for THG has been increased compared to 1 year ago.
Compared to 5 years ago, THG has less shares outstanding
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 63.64% 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 62.24% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.28 | ||
| Debt/FCF | 0.99 | ||
| Altman-Z | N/A |
ROIC/WACC0.37
WACC8.39%
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 765.58%, which is quite impressive.
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 3.52%.
THG shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 5.41% yearly.
EPS 1Y (TTM)765.58%
EPS 3Y15.11%
EPS 5Y10.31%
EPS Q2Q%69.97%
Revenue 1Y (TTM)3.52%
Revenue growth 3Y6.83%
Revenue growth 5Y5.41%
Sales Q2Q%7.4%
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.
Based on estimates for the next years, THG will show a small growth in Revenue. The Revenue will grow by 6.56% on average per year.
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.
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
The Price/Earnings ratio is 12.23, which indicates a correct valuation of THG.
Compared to the rest of the industry, the Price/Earnings ratio of THG is on the same level as its industry peers.
When comparing the Price/Earnings ratio of THG to the average of the S&P500 Index (28.33), we can say THG is valued rather cheaply.
Based on the Price/Forward Earnings ratio of 11.35, the valuation of THG can be described as reasonable.
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 21.37. THG is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 12.23 | ||
| Fwd PE | 11.35 |
4.2 Price Multiples
THG's Enterprise Value to EBITDA ratio is in line with the industry average.
61.54% 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 | 7.39 | ||
| EV/EBITDA | 10.49 |
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)1.58
PEG (5Y)1.19
EPS Next 2Y10.24%
EPS Next 3Y8.33%
5. Dividend
5.1 Amount
THG has a Yearly Dividend Yield of 2.23%.
Compared to an average industry Dividend Yield of 3.28, THG has a dividend in line with its industry peers.
THG's Dividend Yield is comparable with the S&P500 average which is at 2.51.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.23% |
5.2 History
The dividend of THG decreases each year by -18.55%.
THG has been paying a dividend for at least 10 years, so it has 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
29.13% of the earnings are spent on dividend by THG. This is a low number and sustainable payout ratio.
DP29.13%
EPS Next 2Y10.24%
EPS Next 3Y8.33%
163.05
+5.56 (+3.53%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupInsurance
GICS IndustryInsurance
Earnings (Last)
Earnings (Next)
Inst Owners89.55%
Inst Owner Change1.4%
Ins Owners0.76%
Ins Owner Change0.66%
Market Cap5.88B
Analysts75
Price Target186.95 (14.66%)
Short Float %1.02%
Short Ratio1.52
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.23% |
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)1.99%
PT rev (3m)4.91%
EPS NQ rev (1m)-4.97%
EPS NQ rev (3m)-5.28%
EPS NY rev (1m)-1.05%
EPS NY rev (3m)3.8%
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 | 12.23 | ||
| Fwd PE | 11.35 | ||
| P/S | 0.94 | ||
| P/FCF | 7.39 | ||
| P/OCF | 7.29 | ||
| P/B | 2.07 | ||
| P/tB | 2.21 | ||
| EV/EBITDA | 10.49 |
EPS(TTM)13.33
EY8.18%
EPS(NY)14.36
Fwd EY8.81%
FCF(TTM)22.08
FCFY13.54%
OCF(TTM)22.36
OCFY13.71%
SpS172.84
BVpS78.85
TBVpS73.89
PEG (NY)1.58
PEG (5Y)1.19
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
WACC8.39%
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)765.58%
EPS 3Y15.11%
EPS 5Y10.31%
EPS Q2Q%69.97%
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%7.4%
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%