NASDAQ:HGIC
$34.23
(3/12 5:20PM)
-1.0%
| Open | $34.59 |
Mkt Cap | $942.0 Million |
| High | $34.77 |
52Wk High | $35.33 |
| Low | $34.18 |
52Wk Low | $26.09 |
| Volume | 25,954 |
Avg Vol 10D | 34,300 |
Ockham's Rating/Recommendation Summary
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HGIC Revenue
Cash earnings is the most important factor in our analysis, but it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company's stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 10 years. For, HGIC the high and low end of the Price to Sales per share ratios are 1.28x and 0.82x respectively.
Notice that HGIC's current Price to Sales per share ratio is 0.96x, which is below its historical average only slightly. So, while not a huge positive for our analysis, we do feel it is worth noting that HGIC does look a bit undervalued on a Price to Sales basis, all other factors being equal. However, if the Price to Sales ratio drops further, Ockham Research is likely to become more bullish on this stock.
HGIC Cash Earnings
As a value investment framework, Ockham Research is similar to a private equity firm in terms of our valuation methods. We are always on the lookout for value in the form of sales and cash numbers. In the case of HGIC, Ockham views their current Cash Earnings as significantly below its historical average multiple of Cash Earnings. Looking at the last 10 years we can get a good understanding of what investors have grown to expect from HGIC. For example, HGIC's Cash Earnings ratio per share has fluctuated between 12.02 and 19.67 over this historical timeframe. This range is based upon a proprietary weighted methodology at Ockham, but can clearly show an investor where HGIC is with respect to prior business periods.
Now that HGIC’s current price is $34.23 and its Price to Cash Earnings ratio is 10.90, we are very positive on its outlook from the cash earnings perspective. In fact, HGIC is now trading a full 32% below its average historical Price to Cash Earnings ratio at these profit per share levels. When our clients ask us why HGIC has great long term potential, the Cash Earnings levels to current stock is one of our primary reasons. But naturally, now we need for the overall market to recognize this disparity.
HGIC Dividends
When determining a company's future prospects for success, Ockham Research sees analysis of dividend payments as a key additional factor. Even though it isn't imperative for HGIC to shell out a dividend in order to receive a positive rating, it can be helpful to further our analysis.
The estimated annual dividend for HGIC is $1.30 producing a current dividend yield of 3.80%. Much like our evaluation of Sales and Cash Earnings per share, we review dividend yields from HGIC against the historic high and low levels over all available dividend history. Because dividends are a decision made exclusively by management, we view a healthy and rising dividend as a sign of confidence and strength. The highest dividend yield from HGIC over previous years was 4.98% while the lowest dividend yield was 1.88%. HGIC has shown confidence by hiking up the dividend yield to 10.79% above the historical median.
