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:
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (MM) | $4,891 | $4,827 | $5,228 | $5,469 |
| Interest Income | -$37,500 | -$37,100 | -$34,000 | -$34,100 |
| Net Margins | 8.69% | 7.43% | 8.01% | 2.12% |
| 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 |
| EPS Growth | n/a | -9.94% | 21.97% | -71.89% |
| 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.
