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Hartford Financial Stock Jumps 42.5% YTD: Buy More or Buckle Up?
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The insurance player, The Hartford Financial Services Group, Inc. (HIG - Free Report) , continues to exhibit improving renewal written pricing in Commercial Lines. The company has seen its shares rise 42.5% in the year-to-date period, outpacing the industry’s 13.2% growth. The company also outperformed the S&P 500’s return of 13.3%.
Moreover, the stock is trading above its 50-day and 200-day moving averages, indicating solid upward momentum. Currently priced at $114.49, the stock is just 2.5% below its 52-week high of $117.46. This proximity underscores investor confidence and market optimism about this multi-line insurance company’s prospects.
HIG’s YTD Price Performance
Image Source: Zacks Investment Research
Key Points to Note for HIG
HIG’s return on equity of 21.2% is above the industry average of 16.2%, signaling effective usage of its equity base to generate profits. It also indicates a competitive advantage over its peers. Higher reinvestment rates are expected to continue benefiting its investment income, especially the fixed portion.
Global Specialty is likely to benefit from increases in global reinsurance, which will support its Commercial Lines performance. Auto-renewal written price increases can further boost its premiums.
Its balance sheet strength enables it to make shareholder value boosting efforts. In the second quarter alone, HIG returned $490 million to shareholders via share buybacks of $350 million and dividends of $140 million. It has also approved a new share repurchase program worth $3.3 billion effective through 2026.
For the past five consecutive quarters, its Commercial Lines renewal written pricing, excluding workers’ compensation, is increasing, which is boosting its margins. These rate increases are expected to position the company for profit growth, as evident from the estimates.
Estimates for HIG & Surprise History
The Zacks Consensus Estimate for 2024 adjusted earnings for HIG is currently pegged at $10.09 per share, indicating 13.6% year-over-year growth. The consensus mark for next year suggests a further 14.1% jump. It beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 13.1%. This is depicted in the figure below.
The Hartford Financial Services Group, Inc. Price and EPS Surprise
The consensus estimate for 2024 and 2025 revenues suggests 9.9% and 9.7% year-over-year growth, respectively.
Key Concerns for HIG
There are a few factors that investors should keep an eye on.
Lower net rates may affect its workers’ compensation business, which is expected to witness gradual margin shrinkage. This can partly offset the positives in Commercial Lines.
From a valuation perspective, Hartford Financial appears relatively expensive, which may constrain short-term gains and make it less appealing compared to other investment opportunities. Going by its price/earnings ratio, the company is trading at a forward earnings multiple of 10.34X, higher than its five-year median of 9.16X and the industry average of 8.74X.
Final Words: Hold HIG Stock for Now
Hartford Financial’s improving Commercial Lines business, strong investment income, balance sheet and shareholder-friendly moves make it an attractive stock to retain for current investors. The earnings estimates indicating further profit growth add to its appeal. However, prospective buyers may consider waiting for a more favorable entry point due to the stock's elevated valuation and keep an eye on its workers’ compensation business.
HIG currently carries a Zacks Rank #3 (Hold).
Better-Ranked Players
Investors interested in the broader Finance space may look at some better-ranked players like Jackson Financial Inc. (JXN - Free Report) , WisdomTree, Inc. (WT - Free Report) and HIVE Digital Technologies Ltd. (HIVE - Free Report) . While Jackson Financial currently sports a Zacks Rank #1 (Strong Buy), WisdomTree and HIVE Digital carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Jackson Financial’s current-year earnings is pegged at $18.49 per share, which indicates 44% year-over-year growth. It witnessed two upward estimate revisions in the past 30 days against no downward movement. The consensus mark for JXN’s current year revenues suggests a 116.7% surge from a year ago.
The Zacks Consensus Estimate for WisdomTree’s 2024 earnings indicates 67.6% year-over-year growth. During the past month, WT has witnessed two upward estimate revisions against none in the opposite direction. It beat earnings estimates twice in the past four quarters and met on the other occasions, with an average surprise of 5.9%.
The Zacks Consensus Estimate for HIVE Digital’s current-year earnings suggests a 63.6% year-over-year improvement. During the past month, HIVE has witnessed two upward estimate revisions against none in the opposite direction. The consensus mark for current-year revenues is pegged at $125.2 million, indicating a 9.4% increase from a year ago.
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Hartford Financial Stock Jumps 42.5% YTD: Buy More or Buckle Up?
The insurance player, The Hartford Financial Services Group, Inc. (HIG - Free Report) , continues to exhibit improving renewal written pricing in Commercial Lines. The company has seen its shares rise 42.5% in the year-to-date period, outpacing the industry’s 13.2% growth. The company also outperformed the S&P 500’s return of 13.3%.
Moreover, the stock is trading above its 50-day and 200-day moving averages, indicating solid upward momentum. Currently priced at $114.49, the stock is just 2.5% below its 52-week high of $117.46. This proximity underscores investor confidence and market optimism about this multi-line insurance company’s prospects.
HIG’s YTD Price Performance
Key Points to Note for HIG
HIG’s return on equity of 21.2% is above the industry average of 16.2%, signaling effective usage of its equity base to generate profits. It also indicates a competitive advantage over its peers. Higher reinvestment rates are expected to continue benefiting its investment income, especially the fixed portion.
Global Specialty is likely to benefit from increases in global reinsurance, which will support its Commercial Lines performance. Auto-renewal written price increases can further boost its premiums.
Its balance sheet strength enables it to make shareholder value boosting efforts. In the second quarter alone, HIG returned $490 million to shareholders via share buybacks of $350 million and dividends of $140 million. It has also approved a new share repurchase program worth $3.3 billion effective through 2026.
For the past five consecutive quarters, its Commercial Lines renewal written pricing, excluding workers’ compensation, is increasing, which is boosting its margins. These rate increases are expected to position the company for profit growth, as evident from the estimates.
Estimates for HIG & Surprise History
The Zacks Consensus Estimate for 2024 adjusted earnings for HIG is currently pegged at $10.09 per share, indicating 13.6% year-over-year growth. The consensus mark for next year suggests a further 14.1% jump. It beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 13.1%. This is depicted in the figure below.
The Hartford Financial Services Group, Inc. Price and EPS Surprise
The Hartford Financial Services Group, Inc. price-eps-surprise | The Hartford Financial Services Group, Inc. Quote
The consensus estimate for 2024 and 2025 revenues suggests 9.9% and 9.7% year-over-year growth, respectively.
Key Concerns for HIG
There are a few factors that investors should keep an eye on.
Lower net rates may affect its workers’ compensation business, which is expected to witness gradual margin shrinkage. This can partly offset the positives in Commercial Lines.
From a valuation perspective, Hartford Financial appears relatively expensive, which may constrain short-term gains and make it less appealing compared to other investment opportunities. Going by its price/earnings ratio, the company is trading at a forward earnings multiple of 10.34X, higher than its five-year median of 9.16X and the industry average of 8.74X.
Final Words: Hold HIG Stock for Now
Hartford Financial’s improving Commercial Lines business, strong investment income, balance sheet and shareholder-friendly moves make it an attractive stock to retain for current investors. The earnings estimates indicating further profit growth add to its appeal. However, prospective buyers may consider waiting for a more favorable entry point due to the stock's elevated valuation and keep an eye on its workers’ compensation business.
HIG currently carries a Zacks Rank #3 (Hold).
Better-Ranked Players
Investors interested in the broader Finance space may look at some better-ranked players like Jackson Financial Inc. (JXN - Free Report) , WisdomTree, Inc. (WT - Free Report) and HIVE Digital Technologies Ltd. (HIVE - Free Report) . While Jackson Financial currently sports a Zacks Rank #1 (Strong Buy), WisdomTree and HIVE Digital carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Jackson Financial’s current-year earnings is pegged at $18.49 per share, which indicates 44% year-over-year growth. It witnessed two upward estimate revisions in the past 30 days against no downward movement. The consensus mark for JXN’s current year revenues suggests a 116.7% surge from a year ago.
The Zacks Consensus Estimate for WisdomTree’s 2024 earnings indicates 67.6% year-over-year growth. During the past month, WT has witnessed two upward estimate revisions against none in the opposite direction. It beat earnings estimates twice in the past four quarters and met on the other occasions, with an average surprise of 5.9%.
The Zacks Consensus Estimate for HIVE Digital’s current-year earnings suggests a 63.6% year-over-year improvement. During the past month, HIVE has witnessed two upward estimate revisions against none in the opposite direction. The consensus mark for current-year revenues is pegged at $125.2 million, indicating a 9.4% increase from a year ago.