Employers Holdings, Inc. (NYSE: EIG)

Sector: Financial Services Industry: Insurance - Specialty CIK: 0001379041
Market Cap 1.06 Bn
P/B 1.02
P/E 16.90
P/S 1.17
ROIC (Qtr) 5.33
Div Yield % 3.63
Rev 1y % (Qtr) 6.83
Total Debt (Qtr) 4.10 Mn
Debt/Equity (Qtr) 0.00

About

Employers Holdings, Inc. (EHI), a company that operates in the insurance industry, is primarily engaged in providing workers' compensation insurance to small and select businesses in the United States. With the exception of four states that are served exclusively by their state funds, EHI's subsidiaries offer workers' compensation insurance to employers in various industries, such as landscaping, janitorial, and artisan contracting. EHI's main business activities involve underwriting and investing in workers' compensation insurance policies. The...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 57.10M provides robust 13.93x coverage of total debt 4.10M, indicating excellent debt servicing capability and financial flexibility.
  • Operating cash flow of 57.10M provides exceptional 190.33x coverage of interest expenses 300000, showing strong debt service capability.
  • Strong tangible asset base of 3.48B provides 847.95x coverage of total debt 4.10M, indicating robust asset backing and low credit risk.
  • Operating cash flow of 57.10M provides strong 10.02x coverage of stock compensation 5.70M, indicating sustainable incentive practices.
  • Robust free cash flow of 53.40M exceeds capital expenditure of 3.70M by 14.43x, indicating strong organic growth funding capability.

Bear case

  • Operating cash flow of 57.10M barely covers its investment activities of 97.40M, with a coverage ratio of 0.59, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 57.10M provides thin coverage of dividend payments of (30.30M) with a -1.88 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Operating cash flow of 57.10M provides insufficient coverage of deferred revenue obligations of 420.40M, which is 0.14x, raising concerns about future service delivery capabilities.
  • Operating cash flow of 57.10M is outpaced by equity issuance of (100.70M) (-0.57 ratio), indicating concerning reliance on equity markets for funding operations.
  • Retained earnings of 1.48B provide limited buffer against comprehensive income items of (36.60M), which is -40.56x, indicating elevated exposure to market risks.

Peer comparison

Companies in the Insurance - Specialty
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 FNF Fidelity National Financial, Inc. 14.91 Bn 12.76 1.06 4.77 Bn
2 AXS Axis Capital Holdings Ltd 8.73 Bn 8.89 1.39 1.49 Bn
3 MTG Mgic Investment Corp 7.13 Bn 9.46 5.86 0.65 Bn
4 ESNT Essent Group Ltd. 6.66 Bn 9.47 5.27 0.49 Bn
5 RYAN Ryan Specialty Holdings, Inc. 6.64 Bn 96.02 2.24 3.58 Bn
6 FAF First American Financial Corp 6.33 Bn 13.13 0.89 2.85 Bn
7 ACT Enact Holdings, Inc. 6.06 Bn 9.19 4.95 0.74 Bn
8 RDN Radian Group Inc 5.23 Bn 9.08 4.17 1.13 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.28 0.71
EV to Cash from Ops. EV/CFO 17.29 14.19
EV to Debt EV to Debt 240.73 23.24
EV to EBIT EV/EBIT 12.89 18.43
EV to EBITDA EV/EBITDA 12.32 16.13
EV to Free Cash Flow [EV/FCF] EV/FCF 18.48 16.11
EV to Market Cap EV to Market Cap 0.94 1.73
EV to Revenue EV/Rev 1.09 5.55
Price to Book Value [P/B] P/B 1.01 1.80
Price to Earnings [P/E] P/E 16.85 15.04
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 2.06 2.59
Dividend Payout Ratio % Div Payout % (Qtr) 48.80 38.44
Dividend per Basic Share Div per Share (Qtr) 1.24 2.02
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 54.60 72.23
Interest Coverage Int. cover (Qtr) 255.33 24.83
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 5.13 -23.94
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 16.38 -13.37
Dividend Growth (1y) % Div 1y % (Qtr) 6.90 6.74
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -53.99 22.43
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -54.10 10.45
EBIT Growth (1y) % EBIT 1y % (Qtr) -55.13 35.06
EBT Growth (1y) % EBT 1y % (Qtr) -55.14 50.45
EPS Growth (1y) % EPS 1y % (Qtr) -52.52 37.38
FCF Growth (1y) % FCF 1y % (Qtr) -38.62 -3.02
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -24.17 11.39
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.26 0.23
Cash Payout Ratio Cash Payout (Qtr) 0.50 0.51
Cash Ratio Cash Ratio 0.00 0.00
Current Ratio Current Ratio 0.00 0.06
Debt to Equity Ratio Debt/Equity (Qtr) 0.00 0.51
Interest Cover Ratio Int Coverage (Qtr) 255.33 24.83
Times Interest Earned Times Interest Earned (Qtr) 255.33 24.83
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 8.90 36.49
EBIT Margin % EBIT Margin % (Qtr) 8.47 34.57
EBT Margin % EBT Margin % (Qtr) 8.43 17.61
Gross Margin % Gross Margin % (Qtr) 38.00 74.55
Net Profit Margin % Net Margin % (Qtr) 6.90 10.79