DB:FFX

Stock Analysis Report

Fairfax Financial Holdings

Executive Summary

Fairfax Financial Holdings Limited, through its subsidiaries, provides property and casualty insurance and reinsurance, and investment management services in the United States, Canada, Asia, and internationally.

Rewards

Trading at 62.3% below its fair value

Earnings grew by 505.7% over the past year

Pays a reliable dividend of 2.11%

Risk Analysis

Earnings are forecast to decline by an average of -9.4% per year for the next 3 years

Significant insider selling over the past 3 months



Snowflake Analysis

Undervalued with solid track record and pays a dividend.


Similar Companies

Chubb

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Share Price & News

How has Fairfax Financial Holdings's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: FFX has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

4.2%

FFX

1.3%

DE Insurance

0.1%

DE Market


1 Year Return

2.3%

FFX

28.9%

DE Insurance

14.1%

DE Market

Return vs Industry: FFX underperformed the German Insurance industry which returned 30.2% over the past year.

Return vs Market: FFX underperformed the German Market which returned 15.1% over the past year.


Shareholder returns

FFXIndustryMarket
7 Day4.2%1.3%0.1%
30 Day4.7%5.5%0.2%
90 Day8.9%8.2%3.3%
1 Year4.6%2.3%34.6%28.9%17.6%14.1%
3 Year6.2%-0.2%67.4%47.2%14.8%4.8%
5 Year6.4%-4.2%102.1%61.8%22.2%5.4%

Price Volatility Vs. Market

How volatile is Fairfax Financial Holdings's share price compared to the market and industry in the last 5 years?


Simply Wall St News

No news available

Valuation

Is Fairfax Financial Holdings undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: FFX (€442) is trading below our estimate of fair value (€1171.26)

Significantly Below Fair Value: FFX is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: FFX is good value based on its PE Ratio (6.4x) compared to the Insurance industry average (12.7x).

PE vs Market: FFX is good value based on its PE Ratio (6.4x) compared to the German market (20.9x).


Price to Earnings Growth Ratio

PEG Ratio: FFX's earnings are forecast to decline next year, so we can't calculate its PEG ratio.


Price to Book Ratio

PB vs Industry: FFX is good value based on its PB Ratio (1x) compared to the DE Insurance industry average (1.2x).


Next Steps

Future Growth

How is Fairfax Financial Holdings forecast to perform in the next 1 to 3 years based on estimates from 6 analysts?

-9.4%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: FFX's earnings are forecast to decline over the next 3 years (-9.4% per year).

Earnings vs Market: FFX's earnings are forecast to decline over the next 3 years (-9.4% per year).

High Growth Earnings: FFX's earnings are forecast to decline over the next 3 years.

Revenue vs Market: FFX's revenue (2.7% per year) is forecast to grow slower than the German market (5% per year).

High Growth Revenue: FFX's revenue (2.7% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: FFX's Return on Equity is forecast to be low in 3 years time (11.3%).


Next Steps

Past Performance

How has Fairfax Financial Holdings performed over the past 5 years?

16.2%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: FFX has high quality earnings.

Growing Profit Margin: FFX's current net profit margins (9.3%) are higher than last year (1.9%).


Past Earnings Growth Analysis

Earnings Trend: FFX's earnings have grown by 16.2% per year over the past 5 years.

Accelerating Growth: FFX's earnings growth over the past year (505.7%) exceeds its 5-year average (16.2% per year).

Earnings vs Industry: FFX earnings growth over the past year (505.7%) exceeded the Insurance industry 7.8%.


Return on Equity

High ROE: FFX's Return on Equity (11%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Fairfax Financial Holdings's financial position? (This company is analysed differently as a bank or financial institution)


Financial Position Analysis


Debt to Equity History and Analysis


Balance Sheet

Inventory Level: FFX has a low level of unsold assets or inventory.

Debt Coverage by Assets: FFX's debt is covered by short term assets (assets are 4.4x debt).


Financial Institutions Analysis

Asset Level: FFX's level of assets compared to its equity is low.

Allowance for Bad Loans: Insufficient data to determine if FFX has a sufficient allowance for bad loans.

Low Risk Liabilities: FFX reports no customer deposits, loans are made up entirely of externally borrowed funds.

Loan Level: Insufficient data to determine if FFX has an acceptable proportion of non-loan assets held.

Low Risk Deposits: FFX has advanced significantly more loans than the customer deposits it holds.

Level of Bad Loans: Insufficient data to determine if FFX has an appropriate level of bad loans.


Next Steps

Dividend

What is Fairfax Financial Holdings's current dividend yield, its reliability and sustainability?

2.11%

Current Dividend Yield


Dividend Yield vs Market

company2.1%marketbottom25%1.3%markettop25%3.6%industryaverage3.5%forecastin3Years2.1%

Current dividend yield vs market & industry

Notable Dividend: FFX's dividend (2.11%) is higher than the bottom 25% of dividend payers in the German market (1.31%).

High Dividend: FFX's dividend (2.11%) is low compared to the top 25% of dividend payers in the German market (3.59%).


Stability and Growth of Payments

Stable Dividend: FFX's dividends per share have been stable in the past 10 years.

Growing Dividend: FFX's dividend payments have not increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its low payout ratio (13.4%), FFX's dividend payments are thoroughly covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: FFX's dividends in 3 years are forecast to be well covered by earnings (27% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

7.8yrs

Average management tenure


CEO

V. Watsa (69yo)

35.1yrs

Tenure

US$1,318,207

Compensation

Mr. V. Prem Watsa founded Fairfax Financial Holdings Limited in 1985 and has been its Chairman and Chief Executive Officer since 1985. Mr. Watsa serves as the President of 1109519 Ontario Limited, 810679 O ...


CEO Compensation Analysis

Compensation vs Market: V.'s total compensation ($USD994.14K) is below average for companies of similar size in the German market ($USD4.37M).

Compensation vs Earnings: V.'s compensation has increased by more than 20% in the past year.


Leadership Team

NamePositionTenureCompensationOwnership
V. Watsa
Founder35.1yrsUS$1.32m6.93% $815.2m
Peter Clarke
VP & COO1yrsUS$1.48m0.013% $1.5m
Jennifer Allen
Chief Financial Officer0.5yrsno data0.0043% $500.0k
Vinodh Loganadhan
Vice President of Administrative Services0yrsno data0.012% $1.4m
Derek Bulas
Associate Vice President of Legal0yrsno datano data
John Varnell
Vice President of Corporate Development7.5yrsUS$1.02m0.011% $1.3m
Eric Salsberg
VP of Corporate Affairs & Corporate Secretary8.1yrsUS$942.68k0.32% $37.3m
Ronald Schokking
VP & Treasurer14yrsUS$877.90k0.11% $13.5m
Andrew Barnard
President of Fairfax Insurance Group0yrsno data0.18% $21.5m
Bruno Camargo
President of Fairfax Brasil0yrsno datano data

7.8yrs

Average Tenure

63yo

Average Age

Experienced Management: FFX's management team is seasoned and experienced (7.8 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
V. Watsa
Founder35.1yrsUS$1.32m6.93% $815.2m
Anthony Griffiths
Lead Director0yrsUS$168.05k0.025% $2.9m
Brandon Sweitzer
Independent Director16.1yrsUS$168.75k0.0075% $878.8k
Timothy Price
Independent Director9.8yrsUS$91.20k0.0076% $888.2k
John Ralph Palmer
Independent Director7.8yrsUS$90.50k0.0043% $504.7k
Robert Gunn
Independent Director12.8yrsUS$185.80k0.0037% $438.8k
R. McFarland
Director0.6yrsno data0.00075% $88.2k
Lauren Templeton
Independent Director2.8yrsUS$91.47k0.093% $10.9m
Benjamin Watsa
Director4.8yrsUS$84.69k0.0020% $232.9k
Karen Jurjevich
Independent Director2.8yrsUS$85.00kno data

7.8yrs

Average Tenure

73yo

Average Age

Experienced Board: FFX's board of directors are considered experienced (7.8 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: FFX insiders have sold more shares than they have bought in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Fairfax Financial Holdings Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Fairfax Financial Holdings Limited
  • Ticker: FFX
  • Exchange: DB
  • Founded: 1951
  • Industry: Multi-line Insurance
  • Sector: Insurance
  • Market Cap: CA$16.875b
  • Listing Market Cap: CA$11.764b
  • Shares outstanding: 26.83m
  • Website: https://www.fairfax.ca

Number of Employees


Location

  • Fairfax Financial Holdings Limited
  • 95 Wellington Street West
  • Suite 800
  • Toronto
  • Ontario
  • M5J 2N7
  • Canada

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
FFHTSX (The Toronto Stock Exchange)YesSubordinate Voting SharesCACADJan 1975
FRFH.FOTCPK (Pink Sheets LLC)YesSubordinate Voting SharesUSUSDJan 1975
FFXDB (Deutsche Boerse AG)YesSubordinate Voting SharesDEEURJan 1975
FFH NBMV (Bolsa Mexicana de Valores)YesSubordinate Voting SharesMXMXNJan 1975
0KV5LSE (London Stock Exchange)YesSubordinate Voting SharesGBCADJan 1975
FFH.PRCTSX (The Toronto Stock Exchange)PFD SHS CCACADOct 2009
FXFL.FOTCPK (Pink Sheets LLC)PFD SHS CUSUSDOct 2009
FFH.PRETSX (The Toronto Stock Exchange)PFD SHS SER ECACADFeb 2010
FRFG.FOTCPK (Pink Sheets LLC)PFD SHS SER EUSUSDFeb 2010
FFH.PRGTSX (The Toronto Stock Exchange)PFD SHS SER GCACADJul 2010
FFH.PRITSX (The Toronto Stock Exchange)RESET CV PFD-ICACADOct 2010
FRFX.FOTCPK (Pink Sheets LLC)RESET CV PFD-IUSUSDOct 2010
FFH.PRKTSX (The Toronto Stock Exchange)CUM 5Y RT PFD KCACADMar 2012
FRFF.FOTCPK (Pink Sheets LLC)CUM 5Y RT PFD KUSUSDMar 2012
FRFZ.FOTCPK (Pink Sheets LLC)PFD SHS SER DUSUSDJan 2015
FFH.PRDTSX (The Toronto Stock Exchange)PFD SHS SER DCACADJan 2015
FFH.PRMTSX (The Toronto Stock Exchange)PFD SHS 5 YR RTCACADMar 2015
FFH.PRFTSX (The Toronto Stock Exchange)PFD SHS SER FCACADApr 2015
FXFH.FOTCPK (Pink Sheets LLC)PFD SHS SER FUSUSDApr 2015
FFH.PRHTSX (The Toronto Stock Exchange)PFD SHS SER HCACADOct 2015
FAXX.FOTCPK (Pink Sheets LLC)PFD SHS SER HUSUSDOct 2015
FFH.PRJTSX (The Toronto Stock Exchange)PFD SHS SER JCACADJan 2016

Biography

Fairfax Financial Holdings Limited, through its subsidiaries, provides property and casualty insurance and reinsurance, and investment management services in the United States, Canada, Asia, and internationally. It insures against losses to property from fire, explosion, earthquake, windstorm, flood, boiler explosion, machinery breakdown, and construction defects, as well as underwrites automobile, commercial and personal property, and crop insurance. The company also offers workers' compensation, employer’s liability, accident and health, medical malpractice, professional liability, and umbrella coverage insurance products; marine, aerospace, surety risk, and other miscellaneous risks and liabilities insurance products; and reinsurance products, which includes property, casualty, and liability exposures. In addition, it owns, operates, and franchises restaurants; manufactures food products; retails home improvement goods, toys and baby products, golf equipment, consumables, athletic apparel and accessories, and tableware and gifts; invests in retail and other businesses; owns and operates holiday resorts; invests in real estate sector; operates container freight station; and develops, produces, markets, and distributes television programs. Further, the company provides agricultural commodities storage, catering, pet medical insurance and database, and integrated travel and travel-related financial services, as well as infrastructure services to industries and government. It operates approximately 82 toys and baby products stores in Canada. The company was formerly known as Markel Financial Holdings Limited and changed its name to Fairfax Financial Holdings Limited in 1987. Fairfax Financial Holdings Limited was incorporated in 1951 and is headquartered in Toronto, Canada. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/18 20:56
End of Day Share Price2020/02/18 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.