Hanover Insurance logged a -0.8% change during today's morning session, and is now trading at a price of $120.05 per share.
Hanover Insurance returned losses of -18.9% last year, with its stock price reaching a high of $151.78 and a low of $115.26. Over the same period, the stock underperformed the S&P 500 index by -18.0%. As of April 2023, the company's 50-day average price was $128.07. The Hanover Insurance Group, Inc., through its subsidiaries, provides various property and casualty insurance products and services in the United States. Based in Worcester, MA, the mid-cap Finance company has 4,600 full time employees. Hanover Insurance has offered a 2.5% dividend yield over the last 12 months.
Increasing Revenues but Narrowing Margins:
|Net Income (MM)||$425||$359||$419||$116|
|Depreciation & Amort.||-$21,600||-$18,200||-$16,900||-$12,900|
|Earnings Per Share||$10.46||$9.42||$11.49||$3.23|
|Diluted Shares (MM)||41||38||36||36|
|Free Cash Flow (MM)||$590||$693||$816||$704|
|Capital Expenditures (MM)||-$13||-$15||-$8||-$18|
|Long Term Debt||$653,400||$780,800||$781,600||$782,400|
|Net Debt / EBITDA||0.98||1.33||0.96||2.51|
Hanover Insurance has stable revenues and increasing reinvestment in the business and a steady stream of strong cash flows. Additionally, the company's financial statements display decent net margins with a negative growth trend and reasonable leverage. However, the firm has declining EPS growth.
Hanover Insurance's Valuation Is in Line With Its Sector Averages:
Hanover Insurance has a trailing twelve month P/E ratio of 39.7, compared to an average of 14.34 for the Finance sector. Based on its EPS guidance of $12.23, the company has a forward P/E ratio of 10.5. The 3.2% compound average growth rate of Hanover Insurance's historical and projected earnings per share yields a PEG ratio of 12.48. This suggests that these shares are overvalued. Furthermore, Hanover Insurance is likely overvalued compared to the book value of its equity, since its P/B ratio of 1.84 is higher than the sector average of 1.57. The company's shares are currently trading 6.5% above their Graham number. In conclusion, Hanover Insurance's impressive cash flow trend, decent P/B ratio, and reasonable use of leverage demonstrate that the company may still be fairly valued — despite its elevated earnings multiple.
Hanover Insurance Has an Analyst Consensus of Some Upside Potential:
The 6 analysts following Hanover Insurance have set target prices ranging from $141.0 to $170.0 per share, for an average of $149.83 with a buy rating. As of April 2023, the company is trading -14.5% away from its average target price, indicating that there is an analyst consensus of some upside potential.
Hanover Insurance has a very low short interest because 1.5% of the company's shares are sold short. Institutions own 89.6% of the company's shares, and the insider ownership rate stands at 0.87%, suggesting a small amount of insider investors. The largest shareholder is the Vanguard Group, Inc., whose 10% stake in the company is worth $445,610,514.