For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on The Hanover Insurance Group, Inc. (NYSE:THG) useful as an attempt to give more color around how Hanover Insurance Group is currently performing.
Commentary On THG’s Past Performance
THG’s trailing twelve-month earnings (from 30 June 2019) of US$314m has jumped 19% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -3.1%, indicating the rate at which THG is growing has accelerated. What’s the driver of this growth? Let’s see whether it is solely a result of industry tailwinds, or if Hanover Insurance Group has experienced some company-specific growth.
In terms of returns from investment, Hanover Insurance Group has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. However, its return on assets (ROA) of 2.9% exceeds the US Insurance industry of 2.5%, indicating Hanover Insurance Group has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Hanover Insurance Group’s debt level, has increased over the past 3 years from 12% to 12%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 32% to 22% over the past 5 years.
What does this mean?
Though Hanover Insurance Group’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Hanover Insurance Group gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Hanover Insurance Group to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for THG’s future growth? Take a look at our free research report of analyst consensus for THG’s outlook.
- Financial Health: Are THG’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 2019. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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