Today we're going to take a closer look at Large-Cap Finance company RenaissanceRe, whose shares are currently trading at $254.79. We've been asking ourselves whether the company is under or over valued at today's prices... let's perform a brief value analysis to find out!
RenaissanceRe Is Potentially Undervalued and Trades Below Its Graham Number:
RenaissanceRe Holdings Ltd., together with its subsidiaries, provides reinsurance and insurance products in the United States and internationally. The company belongs to the Finance sector, which has an average price to earnings (P/E) ratio of 19.48 and an average price to book (P/B) ratio of 1.85. In contrast, RenaissanceRe has a trailing 12 month P/E ratio of 4.9 and a P/B ratio of 1.42.
RenaissanceRe's PEG ratio is 2.56, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
Exceptional EPS Growth and Generally Positive Cash Flows:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $2,075 | $4,202 | $5,172 | $5,278 | $5,060 | $9,135 |
| Interest Income (M) | $47 | $58 | $50 | $48 | $48 | $73 |
| Operating Margins | 13% | 23% | 19% | -2% | -24% | 34% |
| Net Margins | 11% | 18% | 15% | -1% | -21% | 28% |
| Net Income (M) | $227 | $749 | $762 | -$40 | -$1,061 | $2,561 |
| Depreciation & Amort. (M) | $0 | -$59 | $17 | -$21 | -$27 | -$135 |
| Diluted Shares (M) | 40 | 44 | 50 | 47 | 43 | 48 |
| Earnings Per Share | $4.91 | $16.29 | $15.31 | -$1.57 | -$25.5 | $52.27 |
| EPS Growth | n/a | 231.77% | -6.02% | -110.25% | -1524.2% | 304.98% |
| Avg. Price | $124.02 | $164.47 | $167.51 | $154.17 | $151.55 | $254.79 |
| P/E Ratio | 25.26 | 10.08 | 10.92 | -98.2 | -5.94 | 4.86 |
| Free Cash Flow (M) | $1,222 | $2,137 | $1,993 | $1,235 | $1,604 | $1,912 |
| EV / EBITDA | 18.45 | 6.77 | 6.71 | -76.55 | -5.57 | 3.46 |
| Total Debt (M) | $991 | $1,384 | $1,136 | $1,168 | $1,170 | $1,959 |
| Net Debt / EBITDA | -0.44 | 0.0 | -0.59 | 7.42 | 0.02 | 0.03 |
RenaissanceRe has strong operating margins with a positive growth rate and exceptional EPS growth. Additionally, the company's financial statements display low leverage levels and generally positive cash flows.
