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Hanover Insurance (THG) Up 24% in 6 Months: Will the Rally Last?

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The Hanover Insurance Group (THG - Free Report) shares have gained 24.4% in the past six months compared with the industry's increase of 15.8% and the Finance sector’s increase of 23.7%. The Zacks S&P 500 composite has risen 16.4% in the said time frame. With market capitalization of $4.3 billion, average volume of shares traded in the last three months was 0.2 million.



Prudent management of business mix, focus on growth of the most profitable lines, stable retention, better pricing, strong market presence and effective capital management continue to drive The Hanover Insurance Group. The company beat estimates in all the three reported quarters of 2020.

The company’s trailing 12-month return on equity of 10.9% betters the industry average of 5.6%. The company aims to deliver operating return on equity between 13 and 14% over the long run.

Will the Bull Run Continue?

The Zacks Consensus Estimate indicates year-over-year increase of 2.8% on 3.8% higher revenues. This Zacks Rank #3 (Hold) property and casualty insurer carries a favorable VGM Score of B. Here V stands for Value, G for Growth and M for Momentum, with the score being a weighted combination of all three factors.

Growing its specialty portfolio, expanding new product capabilities, including excess and surplus, cyber and financial institutions, and enhancing professional liability platform bode well for growth. It is also focusing on building its digital capabilities. The company also remains focused on lowering costs.

To improve underwriting profitability, it lowered exposure in vulnerable regions of the Southeast, Gulf Coast and West Coast, while reducing micro concentrations and enhancing reinsurance protections.

The company maintains an active capital management strategy. The company has been increasing dividend each year, recording a five-year CAGR 7.8%. Its yield of 2.4% betters the industry average of 0.6%. This apart the company also pays special dividend. Banking on excess capital, the company entered into a $100 million accelerated share repurchase agreement in October 2020.

The Hanover Insurance Group’s five-year total shareholder return (2015-2019) betters S&P P&C Insurance Index as well as the S&P 500.

Stocks to Consider

Some better-ranked stocks in the same space include Fidelity National Financial (FNF - Free Report) , Radian Group (RDN - Free Report) and The Allstate Corporation (ALL - Free Report) .    
    
Fidelity National delivered an earnings surprise of 18.40% in the last reported quarter. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Radian delivered an earnings surprise of 22.92% in the last reported quarter. It carries a Zacks Rank #2 (Buy).

Allstate delivered an earnings surprise of 66.10% in the last reported quarter. It carries a Zacks Rank #2

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>


 

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