Hanover Insurance Group, Inc. (THG) stock analysis

P/E below its 5-year median

Hanover Insurance's P/E of 11.9 is below its own 5-year median of 13.8.

P/E above the industry

Hanover Insurance's P/E of 11.9 is above the Fire, Marine, and Casualty Insurance median of 10.4.

P/S below the industry

Hanover Insurance's price-to-sales of 1.25 is below the Fire, Marine, and Casualty Insurance median of 1.28.

P/B above the industry

Hanover Insurance's price-to-book of 2.48 is above the Fire, Marine, and Casualty Insurance median of 1.62.

Trading above fair value

The share price of $248.53 is above our fair value estimate of $215.77.

Margin of safety under 20%

The price is 15.2% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew 6.4% a year over the last three fiscal years, short of the 10% we look for.

EPS growing 10%+ a year

Diluted EPS grew 78.2% a year over the last three fiscal years.

Earnings growth accelerating

Net income grew 18.6% over the last twelve months, against a 5-year average of 13.1% a year.

Growing slower than the industry

Revenue grew 5.0% over the last twelve months; the Fire, Marine, and Casualty Insurance median is 5.0%.

Company guidance

No outlook found in earnings releases from the last twelve months.

Gross margin trend

Banks and insurers do not report gross profit.

Return on equity under 15%

Return on equity was 21.8% over the last twelve months and averaged 11.2% over five years; we look for 15% on both.

Return on assets over 1%

Return on assets was 4.4%; for a bank or insurer, 1% or more is considered good.

Return on equity above the industry

Hanover Insurance's return on equity of 21.8% is above the Fire, Marine, and Casualty Insurance median of 15.9%.

Earnings grew over 5 years

Net income grew 13.1% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 11.0% over the last twelve months, against a 5-year average of 5.5%.

Net margin below the industry

Hanover Insurance's net margin of 11.0% is below the Fire, Marine, and Casualty Insurance median of 12.0%.

Low debt

Debt is 1.5% of shareholders' equity, under the 40% we consider low.

Debt trend

Needs a balance sheet from five years ago with positive equity.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 2453% of total debt.

Interest well covered

Operating income covers interest expense 22.8 times.

Short-term liquidity

Insurers do not split assets into current and non-current.

Bankruptcy risk (Altman Z)

The Altman model does not apply to insurers.

Pays a dividend

Hanover Insurance paid dividends worth 1.5% of the share price over the last twelve months.

Yield below Treasuries

The 1.5% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Hanover Insurance yields 1.5%.

Dividend stability

Fewer than five years of dividend history.

Covered by earnings

Dividends take 17.8% of net income.

Covered by free cash flow

Dividends take 10.9% of free cash flow.