Hanover: A Strong Buy - Analyst Blog


Shutterstock photo

On Oct 8, Zacks Investment Research upgraded Hanover Insurance Group Inc. ( THG ) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Hanover has been experiencing rising earnings estimates on the back of improved market trends following its robust second-quarter 2013 results. Moreover, strong capitalization and reduced pricing pressure are deemed impressive.

Additionally, this leading property-casualty insurer delivered positive earnings surprises in the last 4 quarters with an average beat of 24.1%. Hanover also outperformed the year-to-date S&P index, which posted an increase of 18.0% against the robust return of 43.5% clocked by the company.

On Jul 31, Hanover reported second-quarter 2013 operating earnings per share of $1.05, which outpaced both the Zacks Consensus Estimate of 69 cents and the year-ago quarter number of 22 cents.

While year-over-year growth of 3.9% in earned premiums boosted the top line, lower-than-expected loss and loss adjusted expenses boosted the margins, bottom line and combined ratio. Although net investment income decreased marginally over the prior-year quarter, an improved book value per share and return on equity (ROE) reflected a healthy capital position.

Hanover consistently focuses on a diversified product portfolio and strong agency distribution strategy, which enables it to navigate through the current market volatility and tap healthy market opportunities. Alongside, prudent expense and risk management as well as effective capital deployment scores well with the investors.

Based on Hanover's fundamental strength and capital management, the Zacks Consensus Estimate for 2013 rose 5.5% to $4.42 per share in the last 60 days. Moreover, the Most Accurate Estimate for Hanover's 2013 earnings stands at $4.54 a share, resulting in a positive Earnings ESP of 2.7%.

Meanwhile, the estimate for 2014 remained intact at $4.63 over the last 60 days. Furthermore, no downward revision in estimates was witnessed for both the years.

Other Stocks to Consider

Apart from Hanover, other outperforming insurers in the industry include Allied World Assurance Co. Holdings AG ( AWH ), Everest Re ( RE ) and Montpelier Re ( MRH ). All these stocks carry a Zacks Rank #1 (Strong Buy).

ALLIED WORLD AS (AWH): Free Stock Analysis Report

MONTPELIER RE (MRH): Free Stock Analysis Report

EVEREST RE LTD (RE): Free Stock Analysis Report

HANOVER INSURAN (THG): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
More Headlines for: AWH , MRH , RE , THG

More from Zacks.com




Equity Research
Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by BankRate.com