The Hanover Insurance Group, Inc.
The Hanover Insurance Group, Inc. Fundamental Analysis
The Hanover Insurance Group, Inc. (THG) shows moderate financial fundamentals with a PE ratio of 9.40, profit margin of 10.07%, and ROE of 19.99%. The company generates $6.6B in annual revenue with moderate year-over-year growth of 4.25%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 63.4/100 based on profitability, valuation, growth, and balance sheet metrics. The C+ grade reflects average fundamentals, with notable risks in certain areas.
Fundamental Health Score
We analyze THG's fundamental strength across five key dimensions:
Efficiency Score
WeakTHG struggles to generate sufficient returns from assets.
Valuation Score
ExcellentTHG trades at attractive valuation levels.
Growth Score
ModerateTHG shows steady but slowing expansion.
Financial Health Score
ModerateTHG shows balanced financial health with some risks.
Profitability Score
ModerateTHG maintains healthy but balanced margins.
Key Financial Metrics
Is THG Expensive or Cheap?
P/E Ratio
THG trades at 9.40 times earnings. This suggests potential undervaluation.
PEG Ratio
When adjusting for growth, THG's PEG of 1.64 indicates fair valuation.
Price to Book
The market values The Hanover Insurance Group, Inc. at 1.74 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at 6.96 times EBITDA. This is generally considered low.
How Well Does THG Make Money?
Net Profit Margin
For every $100 in sales, The Hanover Insurance Group, Inc. keeps $10.07 as profit after all expenses.
Operating Margin
Core operations generate 12.83 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $19.99 in profit for every $100 of shareholder equity.
ROA
The Hanover Insurance Group, Inc. generates $4.44 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
The Hanover Insurance Group, Inc. produces operating cash flow of $801.79M, showing steady but balanced cash generation.
Free Cash Flow
The Hanover Insurance Group, Inc. generates strong free cash flow of $795.28M, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $22.35 in free cash annually.
FCF Yield
THG converts 12.71% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
9.40
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
1.64
vs 25 benchmark
P/B Ratio
Price to book value ratio
1.74
vs 25 benchmark
P/S Ratio
Price to sales ratio
0.95
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.34
vs 25 benchmark
Current Ratio
Current assets to current liabilities
0.00
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.20
vs 25 benchmark
ROA
Return on assets percentage
0.04
vs 25 benchmark
ROCE
Return on capital employed
0.06
vs 25 benchmark
How THG Stacks Against Its Sector Peers
| Metric | THG Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 9.40 | 18.86 | Better (Cheaper) |
| ROE | 19.99% | 847.00% | Weak |
| Net Margin | 10.07% | 4202.00% | Weak |
| Debt/Equity | 0.34 | 0.91 | Strong (Low Leverage) |
| Current Ratio | 0.00 | 667.17 | Weak Liquidity |
| ROA | 4.44% | -21543.00% (disorted) | Weak |
THG outperforms its industry in 2 out of 6 key metrics, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews The Hanover Insurance Group, Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
41.63%
Industry Style: Value, Dividend, Cyclical
High GrowthEPS CAGR
11.66%
Industry Style: Value, Dividend, Cyclical
High GrowthFCF CAGR
49.03%
Industry Style: Value, Dividend, Cyclical
High Growth