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Hartford Financial Shares Near 52-Week High: How to Play the Stock
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Shares of The Hartford Financial Services Group, Inc. (HIG - Free Report) have rallied 53.4% over the year-to-date period to close at $123.31 on Friday. The recent gains have pushed the stock’s price closer to the upper end of its 52-week range of $77.59-$124.90. It outperformed its peers like MetLife, Inc. (MET - Free Report) and American International Group, Inc. (AIG - Free Report) , the overall industry, and the S&P 500 Index during this time.
YTD HIG Stock Price Performance Comparison
Image Source: Zacks Investment Research
HIG Stock Earnings Estimates & Valuation
The Zacks Consensus Estimate for Hartford Financial’s 2024 adjusted earnings is currently pegged at $10.07 per share, indicating 13.4% growth from the year-ago period’s figure. The consensus mark for 2025 adjusted earnings signals further 14.8% growth. The consensus estimate for 2024 and 2025 revenues suggests 10.4% and 9.9% year-over-year growth, respectively. It beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 9.1%. This is depicted in the graph below.
From a valuation perspective, Hartford Financialappears relatively expensive, which may constrain short-term gains and make it less appealing compared to other investment opportunities. Going by its price/earnings (P/E) ratio, the company is trading at a forward earnings multiple of 10.78X, higher than its five-year median of 9.16X and the industry average of 9.63X.
In comparison, companies like MetLife and American International Group are trading at a P/E ratio of 9.21X and 11.73X, respectively.
The Hartford Financial Services Group's Growth Drivers
The company’s stable underlying results from its Commercial Lines segment will aid its performance. In the third quarter, revenues from the segment amounted to $3.7 billion, rising 10.6% year over year. A recovery in its Personal Lines unit will further push its profits higher. The segment’s underlying combined ratio of 93.7% improved 530 bps year over year in the third quarter.
Improving returns from the fixed-income portfolio and higher invested assets are likely to continue boosting its net investment income. By divesting legacy run-off businesses and non-core operations, HIG has improved its risk profile and enhanced financial flexibility. This has allowed the company to expand its product offerings and geographic reach through targeted acquisitions and collaborations.
Its balance sheet strength provides the financial flexibility to pursue growth initiatives, boost shareholder value and navigate through volatile business periods. HIG’s total debt to capital of 20.4% is lower than the industry average of 31.6%.
In the third quarter of 2024, management bought back shares worth $400 million. HIG had a leftover buyback capacity of $3.5 million as of Sept. 30, 2024. It also increased the quarterly common dividend by 11%.
HIG Risks Include Rise in Catastrophe Losses
However, there are some factors that investors should keep an eye on.
Although Hartford Financial’s P&C premiums increased, its catastrophe losses rose in the first nine months of 2024. It is substantially exposed to catastrophic events, weighing on its underwriting results. It already incurred pre-tax catastrophe losses of $688 million in the first nine months of 2024.
A higher expense ratio, group disability loss ratio and loss ratio on supplemental health products can affect its Group Benefits profits. Core earnings of $154 million from the unit declined 9.4% year over year in the third quarter. The company’s total benefits, losses and expenses increased 8.3% year over year to $5.8 billion in the September quarter.
Final Verdict: Hold HIG Stock for Now
Hartford Financial’s improving Commercial Lines and Personal Lines businesses, strong investment income, balance sheet strength and shareholder-friendly moves make it an attractive stock to retain for current investors. The earnings estimates indicate further profit growth, adding 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 Group Benefits business.
Image: Bigstock
Hartford Financial Shares Near 52-Week High: How to Play the Stock
Shares of The Hartford Financial Services Group, Inc. (HIG - Free Report) have rallied 53.4% over the year-to-date period to close at $123.31 on Friday. The recent gains have pushed the stock’s price closer to the upper end of its 52-week range of $77.59-$124.90. It outperformed its peers like MetLife, Inc. (MET - Free Report) and American International Group, Inc. (AIG - Free Report) , the overall industry, and the S&P 500 Index during this time.
YTD HIG Stock Price Performance Comparison
HIG Stock Earnings Estimates & Valuation
The Zacks Consensus Estimate for Hartford Financial’s 2024 adjusted earnings is currently pegged at $10.07 per share, indicating 13.4% growth from the year-ago period’s figure. The consensus mark for 2025 adjusted earnings signals further 14.8% growth. The consensus estimate for 2024 and 2025 revenues suggests 10.4% and 9.9% year-over-year growth, respectively. It beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 9.1%. This is depicted in the graph below.
HIG Stock Price and EPS Surprise
The Hartford Financial Services Group, Inc. price-eps-surprise | The Hartford Financial Services Group, Inc. Quote
From a valuation perspective, Hartford Financialappears relatively expensive, which may constrain short-term gains and make it less appealing compared to other investment opportunities. Going by its price/earnings (P/E) ratio, the company is trading at a forward earnings multiple of 10.78X, higher than its five-year median of 9.16X and the industry average of 9.63X.
In comparison, companies like MetLife and American International Group are trading at a P/E ratio of 9.21X and 11.73X, respectively.
The Hartford Financial Services Group's Growth Drivers
The company’s stable underlying results from its Commercial Lines segment will aid its performance. In the third quarter, revenues from the segment amounted to $3.7 billion, rising 10.6% year over year. A recovery in its Personal Lines unit will further push its profits higher. The segment’s underlying combined ratio of 93.7% improved 530 bps year over year in the third quarter.
Improving returns from the fixed-income portfolio and higher invested assets are likely to continue boosting its net investment income. By divesting legacy run-off businesses and non-core operations, HIG has improved its risk profile and enhanced financial flexibility. This has allowed the company to expand its product offerings and geographic reach through targeted acquisitions and collaborations.
Its balance sheet strength provides the financial flexibility to pursue growth initiatives, boost shareholder value and navigate through volatile business periods. HIG’s total debt to capital of 20.4% is lower than the industry average of 31.6%.
In the third quarter of 2024, management bought back shares worth $400 million. HIG had a leftover buyback capacity of $3.5 million as of Sept. 30, 2024. It also increased the quarterly common dividend by 11%.
HIG Risks Include Rise in Catastrophe Losses
However, there are some factors that investors should keep an eye on.
Although Hartford Financial’s P&C premiums increased, its catastrophe losses rose in the first nine months of 2024. It is substantially exposed to catastrophic events, weighing on its underwriting results. It already incurred pre-tax catastrophe losses of $688 million in the first nine months of 2024.
A higher expense ratio, group disability loss ratio and loss ratio on supplemental health products can affect its Group Benefits profits. Core earnings of $154 million from the unit declined 9.4% year over year in the third quarter. The company’s total benefits, losses and expenses increased 8.3% year over year to $5.8 billion in the September quarter.
Final Verdict: Hold HIG Stock for Now
Hartford Financial’s improving Commercial Lines and Personal Lines businesses, strong investment income, balance sheet strength and shareholder-friendly moves make it an attractive stock to retain for current investors. The earnings estimates indicate further profit growth, adding 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 Group Benefits business.
HIG currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.