The Hanover Insurance Group, Inc., through its subsidiaries, provides various property and casualty insurance products and services in the United States.
The last earnings update was 77 days ago.
Discounted Cash Flow Calculation for DB:AF4 using Excess Returns Model Model
The calculations below outline how an intrinsic value for Hanover Insurance Group is arrived at using the Excess Return Model. This approach is used for finance firms where free cash flow is difficult to estimate.
In the Excess Return Model the value of a firm can be written as the sum of capital invested currently in the firm and the present value of excess returns that the firm expects to make in the future.
The model is sensitive to the Return on Equity of the company versus the Cost of Equity, how these are calculated is detailed below the main calculation.
Amount off the current price
Hanover Insurance Group
is available for.
Share price is
vs Future cash flow value of
Current Discount Checks
Hanover Insurance Group
to be considered undervalued it must be available for at least 20% below the
current price. Less than 40% is even better.
Hanover Insurance Group's share price is below the future cash flow value, and at a moderate discount (> 20%).
Hanover Insurance Group's share price is below the future cash flow value, but not at a substantial discount (< 40%).
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
Hanover Insurance Group's
is considered below, and whether this is a fair price.
Price based on past earnings
Hanover Insurance Group's earnings available for a low price, and how does
this compare to other companies in the same industry?
Hanover Insurance Group's earnings are expected to grow by 4.4% yearly, however this is not considered high growth (20% yearly).
Hanover Insurance Group's revenue is expected to grow by 4% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
Hanover Insurance Group's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
Hanover Insurance Group
has a total score of
3/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
A company's financial position is much like your own financial position,
it includes everything you own
The boxes below represent the relative size of what makes up
Hanover Insurance Group's finances.
The net worth of a company is the difference between its assets and liabilities.
Hanover Insurance Group's short term (1 year) commitments are greater than its holdings of cash and other short term assets.
Hanover Insurance Group's cash and other short term assets cover its long term commitments.
This treemap shows a more detailed breakdown of
Hanover Insurance Group's finances. If any of them are yellow this
indicates they may be out of proportion and red means they relate to one of the
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
Low level of unsold assets.
Debt is covered by short term assets, assets are 4.9x debt.
Nearly all companies have debt. Debt in itself isn’t
however if the debt is too high, or the company can’t afford to pay the interest
on its debts this may have impacts in the future.
The graphic below shows equity (available funds) and debt, we ideally want to
see the red area (debt) decreasing.
If there is any debt we look at the companies capability to repay it, and
whether the level has increased over the past 5 years.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
TENURE AS CEO
Mr. John Conner Roche, also known as Jack, has been President and Chief Executive Officer at Hanover Insurance Group Inc. since November 2017 and serves as its Director. Mr. Roche has been President of Commercial Lines at The Hanover Insurance Group, Inc. since August 22, 2016 and served as its Executive Vice President since May 2013 until February 28, 2017. He serves as President, Chief Executive Officer and Director at Citizens Insurance Company of America. Mr. Roche served as President of Business Insurance and Field Operations at The Hanover Insurance Group, Inc. from December 2009 to August 22, 2016. He served as Senior Vice President of The Hanover Insurance Group, Inc. from 2009 to 2013 and also as its Vice President since 2006. He served as Vice President of Field Operations Marketing & Distribution at The Hanover Insurance Group, Inc. from December 2007 to 2009. He served as Vice President of Underwriting and Product Management for Commercial Lines of The Hanover Insurance Group, Inc. from 2006 to 2007. He has more than two decades of experience in the property and casualty insurance industry, his management experience leading significant business units at St. Paul Travelers and his detailed understanding. From 1994 to 2006, he served in a variety of positions at St. Paul Travelers Companies, Inc., as Vice President of Commercial Accounts. Mr. Roche served in a variety of underwriting and management positions at Fireman's Fund Insurance Company and Atlantic Mutual Insurance Company. He has been a Director at NCCI Holdings, Inc. since May 2014.
Jack's compensation has been consistent with company performance over the past year, both up more than 20%.
Jack's remuneration is about average for companies of similar size in Germany.
Management Team Tenure
Average tenure and age of the
Hanover Insurance Group
management team in years:
The tenure for the Hanover Insurance Group management team is about average.
Executive VP & CFO
Executive VP & President of Hanover Agency Markets
The Hanover Insurance Group, Inc., through its subsidiaries, provides various property and casualty insurance products and services in the United States. The company operates in three segments: Commercial Lines, Personal Lines, and Other. The Commercial Lines segment offers commercial multiple peril, commercial automobile, workers’ compensation, umbrella, healthcare, mono-line general liability, and miscellaneous commercial property insurance products; and other commercial coverages, including inland marine, specialty program business, management and professional liability, surety, and specialty property. The Personal Lines segment provides personal automobile and homeowner’s coverages, as well as other personal coverages, such as personal inland marine, umbrella, fire, personal watercraft, earthquake, and other miscellaneous coverages. The Other segment offers investment management and advisory services to institutions, pension funds, and other organizations. The company markets its products and services through independent agents and brokers. The Hanover Insurance Group, Inc. was founded in 1852 and is headquartered in Worcester, Massachusetts.
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