For most investors, how much a stock's price changes over time is important. Not only can it impact your investment portfolio, but it can also help you compare investment results across sectors and industries.
Another factor that can influence investors is FOMO, or the fear of missing out, especially with tech giants and popular consumer-facing stocks.
What if you'd invested in American Financial Group (AFG) ten years ago? It may not have been easy to hold on to AFG for all that time, but if you did, how much would your investment be worth today?
American Financial Group's Business In-Depth
With that in mind, let's take a look at American Financial Group's main business drivers.
Founded in 1872 and headquartered in Cincinnati, OH, American Financial Group, Inc. is a holding company which, through its subsidiaries, engages primarily in property and casualty insurance, with focus on specialized commercial products for businesses. The company also engages in the sale of traditional fixed, fixed-indexed and variable-indexed annuities in the retail, financial institutions, registered investment advisor and education markets.
Property and Casualty Insurance Operations – These operations consist of approximately 30 niche insurance businesses offering a wide range of commercial coverage. The business is conducted through Property and Transportation (consisting Inland and Ocean Marine, Agricultural-related and Commercial Automobile), Specialty Casualty (consisting Executive and Professional Liability, Umbrella and Excess Liability, Excess and Surplus, General Liability, Targeted Programs and Workers’ Compensation) and Specialty Financial (consisting Fidelity and Surety and Lease and Loan Services). These operations are conducted through subsidiaries namely Great American Insurance, National Interstate, Summit (Bridgefield Casualty and Bridgefield Employers), Republic Indemnity, Neon Lloyd’s Syndicate and Mid-Continent Casualty.
Other Operations – Through subsidiaries, it is engaged in a variety of other operations, including commercial real estate operations in Cincinnati (office buildings), Whitefield, New Hampshire (Mountain View Grand Resort), Chesapeake Bay (Skipjack Cove Yachting Resort and Bay Bridge Marina), Charleston (Charleston Harbor Resort and Marina) and Palm Beach.
American Financial divested its Annuity businesses on May 2021.
Anyone can invest, but building a successful investment portfolio requires research, patience, and a little bit of risk. So, if you had invested in American Financial Group ten years ago, you're likely feeling pretty good about your investment today.
According to our calculations, a $1000 investment made in November 2012 would be worth $3,773.29, or a 277.33% gain, as of November 21, 2022. Investors should keep in mind that this return excludes dividends but includes price appreciation.
Compare this to the S&P 500's rally of 191.59% and gold's return of -2.75% over the same time frame.
Going forward, analysts are expecting more upside for AFG.
Consistent price increase in property and casualty business of American Financial should favor results. It estimates renewal rates in 2022 to increase nearly 5%. It boasts impressive inorganic growth and is prudently investing in businesses. American Financial is actively involved in startups, small-to-medium sized acquisitions, and product launches. Better industry fundamentals, a high renewal ratio, and favorable combined ratio should drive growth. Solid capital position enables it to deploy capital effectively. It expects earnings of $11 to $11.75 per share with net written premiums in the Specialty P&C expected to 10% to 12% higher than the $5.6 billion reported in 2021. Shares have underperformed its industry in a year. However, exposure to weather-related calamities induces earnings volatility while higher expenses tend to weigh on margin.
The stock has jumped 9.59% over the past four weeks. Additionally, no earnings estimate has gone lower in the past two months, compared to 3 higher, for fiscal 2022; the consensus estimate has moved up as well.
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American Financial Group, Inc. (AFG) : Free Stock Analysis Report
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