Definitive Analysis
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Definitive Analysis

Financial Statements

Ticker

Industry

Sector

The Hanover Insurance Group, Inc. (THG)

Company Dividend Discount ModelIndustry: Insurance - Property & CasualtySector: Financial Services

Valuation Snapshot

Stable Growth$198.22 - $327.26$255.46
Multi-Stage$332.52 - $365.58$348.73
Blended Fair Value$302.10
Current Price$181.63
Upside66.33%
DecisionBuy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS-20.31%6.36%3.403.222.992.802.7310.602.592.382.212.04
YoY Growth--5.89%7.62%6.56%2.71%-74.24%309.54%8.64%7.96%8.36%10.75%
Dividend Yield--1.96%2.40%2.33%1.88%2.11%11.70%2.25%2.02%2.45%2.26%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)631.90
(-) Cash Dividends Paid (M)129.30
(=) Cash Retained (M)502.60
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)126.3878.9947.39
Cash Retained (M)502.60502.60502.60
(-) Cash Required (M)-126.38-78.99-47.39
(=) Excess Retained (M)376.22423.61455.21
(/) Shares Outstanding (M)36.4536.4536.45
(=) Excess Retained per Share10.3211.6212.49
LTM Dividend per Share3.553.553.55
(+) Excess Retained per Share10.3211.6212.49
(=) Adjusted Dividend13.8715.1716.04
WACC / Discount Rate7.07%7.07%7.07%
Growth Rate0.07%1.07%2.07%
Fair Value$198.22$255.46$327.26
Upside / Downside9.13%40.65%80.18%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)631.90638.63645.43652.31659.25666.28686.27
Payout Ratio20.46%34.37%48.28%62.18%76.09%90.00%92.50%
Projected Dividends (M)129.30219.50311.60405.64501.64599.65634.80

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate7.07%7.07%7.07%
Growth Rate0.07%1.07%2.07%
Year 1 PV (M)202.98205.01207.04
Year 2 PV (M)266.47271.82277.23
Year 3 PV (M)320.79330.51340.41
Year 4 PV (M)366.87381.75397.09
Year 5 PV (M)405.55426.22447.73
PV of Terminal Value (M)10,557.8611,096.0611,655.99
Equity Value (M)12,120.5212,711.3713,325.49
Shares Outstanding (M)36.4536.4536.45
Fair Value$332.52$348.73$365.58
Upside / Downside83.08%92.00%101.28%

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