Examining The Hanover Insurance Group Inc’s (NYSE:THG) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess THG’s latest performance announced on 30 June 2018 and weight these figures against its longer term trend and industry movements.
Did THG beat its long-term earnings growth trend and its industry?
THG’s trailing twelve-month earnings (from 30 June 2018) of US$246m has jumped 23% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -1.4%, indicating the rate at which THG is growing has accelerated. How has it been able to do this? Let’s take a look at whether it is merely attributable to industry tailwinds, or if Hanover Insurance Group has experienced some company-specific growth.
In terms of returns from investment, Hanover Insurance Group has fallen short of achieving a 20% return on equity (ROE), recording 8.4% instead. Furthermore, its return on assets (ROA) of 1.9% is below the US Insurance industry of 2.1%, indicating Hanover Insurance Group’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Hanover Insurance Group’s debt level, has increased over the past 3 years from 4.1% to 8.9%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 38% to 27% over the past 5 years.
What does this mean?
Though Hanover Insurance Group’s past data is helpful, it is only one aspect of my investment thesis. While Hanover Insurance Group has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research Hanover Insurance Group to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for THG’s future growth? Take a look at our free research report of analyst consensus for THG’s outlook.
- Financial Health: Are THG’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.