Hartford Financial Stock Is Undervalued

HIG: Hartford Financial Services Group logo
Hartford Financial Services Group

Hartford Financial’s stock (NYSE: HIG) has lost roughly 7% YTD as compared to the 13% rise in the S&P500 index over the same period. Further, at the current price of $70 per share, it is trading 17% below its fair value of $85 – Trefis’ estimate for Hartford Financial’s valuation. The property & casualty (P&C) insurance giant posted mixed results in the first quarter, with earnings being in-line with expectations but revenues missing the mark. It reported total revenues of $5.9 billion – up 10% y-o-y, primarily driven by a 9% rise in the earned premiums. The premiums mainly benefited from growth in the property & casualty (P&C) commercial lines and group benefits insurance divisions. On the cost front, total benefits, losses & expenses as a % of revenues slightly decreased in the quarter, resulting in a 21% y-o-y improvement in the adjusted net income to $530 million.

The company’s top line suffered a marginal drop to $22.36 billion in FY2022, despite an 8% rise in the earned premiums. It was because the positive impact was more than offset by lower net investment income, a drop in fee income, and a net realized loss of -$627 million. Further, total expenses as a % of revenues increased in the year. Overall, it led to a 23% y-o-y decrease in the adjusted net income to $1.79 billion. 

Moving forward, we expect the same trend to continue in Q2. Notably, the consensus estimates for Q2 revenues and earnings are $6.05 billion and $1.95 respectively. Overall, Hartford Financial’s revenues are estimated to remain around $24.4 billion in FY2023. Additionally, HIG’s adjusted net income margin is likely to be around 10%, resulting in an adjusted net income of $2.4 billion and an annual GAAP EPS of $7.46. This coupled with a P/E multiple of just above 11x will lead to a valuation of $85.

Relevant Articles
  1. Hartford Financial Stock Lost 4% YTD, Is Correction In The Cards?
  2. Is Hartford Financial Stock Fairly Priced?
  3. Hartford Financial Stock Lost 1.2% In One Week, What’s Next?
  4. Is Hartford Financial Stock Fairly Priced?
  5. Is Hartford Financial Stock Attractive At The Current Levels?
  6. Is Hartford Financial Stock Fairly Priced?

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market consistently since 2016.

 Returns Jun 2023
MTD [1]
YTD [1]
Total [2]
 HIG Return 3% -7% 48%
 S&P 500 Return 4% 13% 94%
 Trefis Multi-Strategy Portfolio 5% 15% 260%

[1] Month-to-date and year-to-date as of 6/26/2023
[2] Cumulative total returns since the end of 2016

Invest with Trefis Market Beating Portfolios
See all Trefis Price Estimates