Why Fundamental Investors Love Universal Insurance Holdings Inc (NYSE:UVE)
As an investor, I look for investments which does not compromise one fundamental factor for another. By this I mean, I look at stocks holistically, from their financial health to their future outlook. In the case of Universal Insurance Holdings Inc (NYSE:UVE), it is a financially-robust company with a a strong track record of performance, trading at a discount. In the following section, I expand a bit more on these key aspects. If you’re interested in understanding beyond my high-level commentary, read the full report on Universal Insurance Holdings here.
Excellent balance sheet, good value and pays a dividend
Over the past few years, UVE has demonstrated a proven ability to generate robust returns of 24.90% Not surprisingly, UVE outperformed its industry which returned 9.44%, giving us more conviction of the company’s capacity to drive bottom-line growth going forward. UVE’s debt-to-equity ratio stands at 2.72%, which means its debt level is low. Investors’ risk associated with debt is very low and the company has plenty of headroom to grow debt in the future, should the need arise. UVE appears to have made good use of debt, producing operating cash levels of 17.73x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated.
UVE is currently trading below its true value, which means the market is undervaluing the company’s expected cash flow going forward. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of UVE’s earnings, investors now have the opportunity to buy into the stock to reap capital gains. Compared to the rest of the insurance industry, UVE is also trading below its peers, relative to earnings generated. This further reaffirms that UVE is potentially undervalued.
Next Steps:
For Universal Insurance Holdings, there are three important aspects you should further research:
Future Outlook: What are well-informed industry analysts predicting for UVE’s future growth? Take a look at our free research report of analyst consensus for UVE’s outlook.
Dividend Income vs Capital Gains: Does UVE return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from UVE as an investment.
Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of UVE? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
To help readers see pass 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.
