HCI Group, Inc. (NYSE: HCI)

Sector: Financial Services Industry: Insurance - Property & Casualty CIK: 0001400810
Market Cap 1.66 Bn
P/B 8.05
P/E 23.56
P/S 5.92
ROIC (Qtr) 26.32
Div Yield % 0.95
Rev 1y % (Qtr) 23.41
Total Debt (Qtr) 71.08 Mn
Debt/Equity (Qtr) 0.09
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About

Investment thesis

Bull case

  • Strong operating cash flow of 408.37M provides robust 5.75x coverage of total debt 71.08M, indicating excellent debt servicing capability and financial flexibility.
  • Operating cash flow of 408.37M provides exceptional 32.42x coverage of minority interest expenses 12.60M, showing strong core operations.
  • Operating cash flow of 408.37M provides strong 36.73x coverage of stock compensation 11.12M, indicating sustainable incentive practices.
  • Operating cash flow of 408.37M provides exceptional 35.61x coverage of interest expenses 11.47M, showing strong debt service capability.
  • Strong tangible asset base of 2.34B provides 32.97x coverage of total debt 71.08M, indicating robust asset backing and low credit risk.

Bear case

  • Operating cash flow of 408.37M provides thin coverage of dividend payments of (18.35M) with a -22.25 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Operating cash flow of 408.37M provides insufficient coverage of deferred revenue obligations of 684.59M, which is 0.60x, raising concerns about future service delivery capabilities.
  • Operating cash flow of 408.37M is outpaced by equity issuance of (724000) (-564.04 ratio), indicating concerning reliance on equity markets for funding operations.
  • Tax assets of 3.17M provide limited offset against tax liabilities of 25.64M, which is 0.12x, indicating potential future cash flow pressure from tax obligations.
  • R&D investment of 0 represents just 0x of SG&A expenses of 188.70M, indicating potential underinvestment in innovation relative to administrative overhead.

Peer comparison

Companies in the Insurance - Property & Casualty
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 PGR Progressive Corp/Oh/ 121.46 Bn 30.80 3.11 6.90 Bn
2 CB Chubb Ltd 109.27 Bn 36.88 5.64 21.01 Bn
3 ALL Allstate Corp 69.21 Bn 29.01 1.62 8.09 Bn
4 TRV Travelers Companies, Inc. 67.61 Bn 10.75 1.38 9.27 Bn
5 HIG Hartford Insurance Group, Inc. 61.19 Bn 37.09 3.27 4.37 Bn
6 WRB Berkley W R Corp 38.52 Bn 124.63 8.69 2.87 Bn
7 CINF Cincinnati Financial Corp 26.91 Bn 74.14 6.73 0.88 Bn
8 MKL Markel Group Inc. 26.46 Bn 13.00 1.68 4.28 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.63 0.50
EV to Cash from Ops. EV/CFO 13.09 -16.03
EV to Debt EV to Debt 20.74 11.42
EV to EBIT EV/EBIT 11.87 22.13
EV to EBITDA EV/EBITDA 11.40 17.53
EV to Free Cash Flow [EV/FCF] EV/FCF 13.15 68.07
EV to Market Cap EV to Market Cap 0.89 0.91
EV to Revenue EV/Rev 5.26 2.31
Price to Book Value [P/B] P/B 8.05 2.97
Price to Earnings [P/E] P/E 23.56 29.62
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 11.11 7.41
Dividend Payout Ratio % Div Payout % (Qtr) 9.30 19.66
Dividend per Basic Share Div per Share (Qtr) 1.60 1.49
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 5.13 37.69
Interest Coverage Int. cover (Qtr) 25.29 -9.19
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 4.51 -17.83
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 89.94 30.27
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 16.34
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 37.27 62.82
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 31.48 35.62
EBIT Growth (1y) % EBIT 1y % (Qtr) 34.52 56.25
EBT Growth (1y) % EBT 1y % (Qtr) 37.39 52.70
EPS Growth (1y) % EPS 1y % (Qtr) 16.23 48.20
FCF Growth (1y) % FCF 1y % (Qtr) -0.47 15.47
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 22.42 16.55
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.35 0.38
Cash Payout Ratio Cash Payout (Qtr) 0.04 0.45
Cash Ratio Cash Ratio 0.00 0.02
Current Ratio Current Ratio 0.00 0.06
Debt to Equity Ratio Debt/Equity (Qtr) 0.09 0.23
Interest Cover Ratio Int Coverage (Qtr) 25.29 -9.19
Times Interest Earned Times Interest Earned (Qtr) 25.29 -9.19
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 36.90 14.01
EBIT Margin % EBIT Margin % (Qtr) 35.53 13.05
EBT Margin % EBT Margin % (Qtr) 34.12 12.25
Gross Margin % Gross Margin % (Qtr) 63.20 40.49
Net Profit Margin % Net Margin % (Qtr) 25.00 9.63