The Hanover Insurance Group, Inc. (THG) Valuation

Valuation

Model-based estimates, not advice. The DCF is the discounted-cash-flow value per share; compare it with the price, not as a target.

DCF fair value

+173.7%

$681.36

vs $248.90 price

Levered DCF

$1,129.12

After debt service

Piotroski score

7 / 9

Strong

Altman Z-score

1.51

Distress zone

Rating

Overall 4 / 5

Ratios by fiscal year

Margins and yields are shares of revenue, equity or price; multiples are ×.

Metric	FY2025	FY2024	FY2023	FY2022	FY2021	FY2020	FY2019	FY2018
P/E	9.87×	13.05×	123.9×	42.1×	11.12×	12.29×	12.35×	12.64×
P/B	1.83×	1.95×	1.76×	2.08×	1.5×	1.38×	1.87×	1.67×
P/S	0.99×	0.89×	0.73×	0.89×	0.91×	0.91×	1.12×	1.11×
EV / EBITDA	7.5×	10.29×	58.92×	27.91×	9.19×	10.13×	10.16×	13.33×
Gross margin	43.5%	19.9%	10.9%	13.2%	20.2%	21.2%	22.5%	19.0%
Operating margin	12.8%	8.7%	0.7%	2.7%	10.1%	9.2%	10.7%	6.3%
Net margin	10.0%	6.9%	0.6%	2.1%	8.2%	7.4%	8.7%	8.8%
Current ratio	0.62×	7.18×	1.99×	15.59×	206.56×	0×	0×	0×
Debt / equity	0.34×	0.28×	0.32×	0.34×	0.25×	0.24×	0.22×	0.26×
Interest coverage	19.53×	15.77×	1.21×	4.22×	15.33×	11.99×	13.92×	6.26×
Dividend yield	2.0%	2.2%	2.7%	2.2%	2.2%	2.3%	7.1%	1.9%
Payout ratio	19.7%	29.1%	332.0%	93.9%	24.2%	27.7%	90.8%	24.1%

Key metrics by fiscal year

Metric	FY2025	FY2024	FY2023	FY2022	FY2021	FY2020	FY2019	FY2018
Return on equity	18.5%	15.0%	1.4%	5.0%	13.4%	11.2%	14.6%	13.2%
Return on invested capital	11.6%	2.9%	0.4%	0.9%	3.0%	0.0%	0.0%	-640.8%
Return on assets	3.9%	2.8%	0.2%	0.8%	3.0%	2.7%	3.4%	3.2%
Free cash flow yield	17.9%	14.3%	8.1%	14.5%	17.3%	15.7%	10.8%	10.9%
Earnings yield	10.2%	7.7%	0.8%	2.4%	9.0%	8.1%	7.8%	7.9%
Enterprise value	$6.6B	$5.9B	$4.8B	$5.3B	$5.3B	$5.1B	$5.9B	$4.7B
Net debt / EBITDA	0.11×	0.61×	5.73×	2.5×	0.96×	1.32×	0.75×	-0.69×
Cash conversion cycle (days)	214	224	229	238	238	239	224	227