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Hanover Insurance (THG) Up 46% in a Year: More Room to Run?
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The Hanover Insurance Group’s (THG - Free Report) shares have gained 46.4% over a year versus the industry's increase of 35.9% and Finance sector’s 58.7% rally. The Zacks S&P 500 composite has risen 59.4% in the said time frame. With market capitalization of $4.7 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 product lines, stable retention, better pricing, strong market presence and effective capital management continue to drive Hanover Insurance’s performance. The company beat estimates in all the four quarters of 2020.
Hanover Insurance’s trailing 12-month return on equity of 11.7% is better than the industry average of 9.7%. It aims to deliver operating return on equity of 13% in the long run, banking on improved rates and cost management.
Will the Rally Continue?
The Zacks Consensus Estimate for 2021 and 2022 earnings has moved 4% and 2.1% north, respectively, in the past seven days, reflecting analysts’ optimism.
This Zacks Rank #3 (Hold) property and casualty insurer carries a favorable VGM Score of A. Here V stands for Value, G for Growth and M for Momentum, with the score being a weighted combination of all three factors.
Hanover Insurance has evolved to be a balanced, small/middle market focused commercial and personal lines carrier. It aims to penetrate the $100-billion market, leveraging agency growth.
Hanover Insurance remains focused on managing costs. It expects 30 basis point expense ratio improvement in 2021, with 31.3% expense ratio for the year. It is on track with long-term expense ratio savings target of 20 basis points per year.
Growth of its specialty portfolio, expansion of new product capabilities — including excess and surplus, cyber and financial institutions — and enhancement of the professional liability platform bode well for growth.
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 estimates net written premium growth in mid-single digits in 2021 driven by growth in profitable businesses.
It remains focused on enhancing shareholder value and has been hiking dividend for the last 15 years, in addition to paying special dividends. Its dividend has increased at a five-year CAGR 7.8%. Its yield of 2.2% is better than the industry average of 0.6%. Banking on excess capital, the company entered into a $100-million accelerated share repurchase agreement in October 2020.
Stocks to Consider
Some better-ranked stocks from the same space include Markel (MKL - Free Report) , Cincinnati Financial (CNA - Free Report) and Alleghany .
Cincinnati Financial delivered an earnings surprise of 37.6% in the last reported quarter. It carries a Zacks Rank #2 (Buy).
Alleghany delivered an earnings surprise of 48.8% in the last reported quarter. It carries a Zacks Rank #2.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.
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Hanover Insurance (THG) Up 46% in a Year: More Room to Run?
The Hanover Insurance Group’s (THG - Free Report) shares have gained 46.4% over a year versus the industry's increase of 35.9% and Finance sector’s 58.7% rally. The Zacks S&P 500 composite has risen 59.4% in the said time frame. With market capitalization of $4.7 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 product lines, stable retention, better pricing, strong market presence and effective capital management continue to drive Hanover Insurance’s performance. The company beat estimates in all the four quarters of 2020.
Hanover Insurance’s trailing 12-month return on equity of 11.7% is better than the industry average of 9.7%. It aims to deliver operating return on equity of 13% in the long run, banking on improved rates and cost management.
Will the Rally Continue?
The Zacks Consensus Estimate for 2021 and 2022 earnings has moved 4% and 2.1% north, respectively, in the past seven days, reflecting analysts’ optimism.
This Zacks Rank #3 (Hold) property and casualty insurer carries a favorable VGM Score of A. Here V stands for Value, G for Growth and M for Momentum, with the score being a weighted combination of all three factors.
Hanover Insurance has evolved to be a balanced, small/middle market focused commercial and personal lines carrier. It aims to penetrate the $100-billion market, leveraging agency growth.
Hanover Insurance remains focused on managing costs. It expects 30 basis point expense ratio improvement in 2021, with 31.3% expense ratio for the year. It is on track with long-term expense ratio savings target of 20 basis points per year.
Growth of its specialty portfolio, expansion of new product capabilities — including excess and surplus, cyber and financial institutions — and enhancement of the professional liability platform bode well for growth.
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 estimates net written premium growth in mid-single digits in 2021 driven by growth in profitable businesses.
It remains focused on enhancing shareholder value and has been hiking dividend for the last 15 years, in addition to paying special dividends. Its dividend has increased at a five-year CAGR 7.8%. Its yield of 2.2% is better than the industry average of 0.6%. Banking on excess capital, the company entered into a $100-million accelerated share repurchase agreement in October 2020.
Stocks to Consider
Some better-ranked stocks from the same space include Markel (MKL - Free Report) , Cincinnati Financial (CNA - Free Report) and Alleghany .
Markel delivered an earnings surprise of 75.1% in the last reported quarter. It sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Cincinnati Financial delivered an earnings surprise of 37.6% in the last reported quarter. It carries a Zacks Rank #2 (Buy).
Alleghany delivered an earnings surprise of 48.8% in the last reported quarter. It carries a Zacks Rank #2.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.
Click here for the 4 trades >>