simply wall

Hanover Insurance Group (NYSE:THG) shareholders have earned a 10% CAGR over the last five years

The Hanover Insurance Group, Inc. (NYSE:THG) shareholders might be concerned after seeing the share price drop 11% in the last quarter. But at least the stock is up over the last five years. However we are not very impressed because the share price is only up 36%, less than the market return of 56%.

So let’s assess the underlying fundamentals over the last 5 years and see if they’ve moved in lock-step with shareholder returns.

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Over half a decade, Hanover Insurance Group managed to grow its earnings per share at 19% a year. The EPS growth is more impressive than the yearly share price gain of 6% over the same period. So it seems the market isn’t so enthusiastic about the stock these days.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

earnings-per-share-growth
NYSE:THG Earnings Per Share Growth September 25th 2022

We consider it positive that insiders have made significant purchases in the last year. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. This free interactive report on Hanover Insurance Group’s earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any

Read the rest