Hartford Financial (HIG) Rises 10.8% in 6 Months: More Room Left?
The Hartford Financial Services Group, Inc.’s HIG shares have gained 10.8% in the past six months, outperforming the 0.2% growth of the industry, thanks to strong business performance.
With a high interest rate environment and greater exposure, the company has positioned itself for better returns in the future.
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Headquartered in Hartford, CT, Hartford Financial benefited from the expanded product offerings and capital appreciation. It is one of the major multi-line insurance and investment companies in the country, providing investment products, group life and group disability insurance, property and casualty insurance, and mutual funds in the United States. Its presence in the U.K. and other international regions bodes well for the company’s business. It currently has a market cap of $21.8 billion.
Can it Retain Momentum?
The answer is yes and before we get into the details, let us show you how its estimates for 2023 stand. The Zacks Consensus Estimate for 2023 earnings per share currently stands at $8.35, signaling a 10.5% year-over-year increase. HIG beat earnings estimates in all of the past four quarters, with an average of 20.9%.
Also, the consensus mark for 2023 revenues is pegged at $16.5 billion, predicting 8.2% growth from the 2022 level.
Now let’s delve into what’s driving the Zacks Rank #3 (Hold) stock.
Founded in 1810, Hartford Financial has created a strong brand and customer relationships through generations. It enables the company to retain existing customers and rope in new clients. Expanding product offerings and geographic reach help the company scale its business in an efficient manner.
HIG’s focus on boosting operating efficiencies and underwriting discipline is praiseworthy. It keeps vending non-core businesses to concentrate on its more profitable operations. Restructuring initiatives help the company enhance margins and cost savings. It expects the Hartford Next initiative to bring cumulative savings of $625 million in 2023 after bringing $561 million in 2022.
Hartford Financial keeps evolving by adopting the digitalization of insurance products. This equips the company with a competitive edge over its peers. Its growing digital and data science capabilities are enriching its platform, which supports its customer growth.
The company’s balance sheet strength will provide financial flexibility to navigate through volatile business periods. Its long-term debt to capitalization of 24.2% is lower than the industry average of 35.7%. This allows the company to take shareholder value boosting measures.
HIG rewarded its shareholders with $473 million in 2022, comprising share repurchases of $350 million and common dividends worth $123 million. Hartford Financial had nearly $2.8 billion left under its repurchase authorization at 2022-end.
Despite the upside potential, there are a few factors that might affect the stock’s growth.
HIG’s Personal Lines unit has been generating loss due to higher auto liability loss over the past few years. The inflationary impact is not doing any good for the segment. Also, catastrophe losses and a decline in free cash flows continue to remain concerning. Nevertheless, we believe that a systematic and strategic plan of action will drive long-term growth.
Key Picks in Finance
Investors interested in the broader finance space can look into companies like CNA Financial Corporation CNA, Mr. Cooper Group Inc. COOP and Arch Capital Group Ltd. ACGL, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for CNA Financial’s 2023 earnings suggests 10.4% year-over-year growth. Also, the consensus mark for CNA’s revenues in 2023 suggests 5.9% year-over-year growth.
The consensus mark for Mr. Cooper Group’s 2023 earnings indicates a 127.4% year-over-year increase. COOP beat earnings estimates in each of the past four quarters with an average of 200.7%.
The Zacks Consensus Estimate for Arch Capital’s 2023 earnings predicts 25.5% year-over-year growth. Over the past 30 days, ACGL has witnessed two upward estimate revisions against none in the opposite direction.
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The Hartford Financial Services Group, Inc. (HIG) : Free Stock Analysis Report
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