Markel Group Inc. (NYSE: MKL)

Sector: Financial Services Industry: Insurance - Property & Casualty CIK: 0001096343
Market Cap 26.46 Bn
P/B 1.47
P/E 13.00
P/S 1.68
ROIC (Qtr) 9.06
Div Yield % 0.00
Rev 1y % (Qtr) 6.52
Total Debt (Qtr) 4.28 Bn
Debt/Equity (Qtr) 0.24
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About

Investment thesis

Bull case

  • Strong operating cash flow of 2.59B provides robust 0.61x coverage of total debt 4.28B, indicating excellent debt servicing capability and financial flexibility.
  • Operating cash flow of 2.59B provides exceptional 12.43x coverage of interest expenses 208.69M, showing strong debt service capability.
  • Operating cash flow of 2.59B provides exceptional 49.51x coverage of minority interest expenses 52.38M, showing strong core operations.
  • Robust free cash flow of 2.38B exceeds capital expenditure of 217.72M by 10.91x, indicating strong organic growth funding capability.
  • Strong tangible asset base of 63B provides 14.70x coverage of total debt 4.28B, indicating robust asset backing and low credit risk.

Bear case

  • Operating cash flow of 2.59B barely covers its investment activities of (1.15B), with a coverage ratio of -2.25, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Cash reserves of 4.62B provide limited coverage of acquisition spending of (60.52M), which is -76.28x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 2.59B provides insufficient coverage of deferred revenue obligations of 8.23B, which is 0.31x, raising concerns about future service delivery capabilities.
  • Free cash flow of 2.38B represents just -32.19x of debt issuance (73.80M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Retained earnings of 14.51B provide limited buffer against comprehensive income items of (138.97M), which is -104.43x, indicating elevated exposure to market risks.

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 0.39 0.50
EV to Cash from Ops. EV/CFO 10.23 -16.03
EV to Debt EV to Debt 6.19 11.42
EV to EBIT EV/EBIT 9.22 22.13
EV to EBITDA EV/EBITDA 9.13 17.53
EV to Free Cash Flow [EV/FCF] EV/FCF 11.17 68.07
EV to Market Cap EV to Market Cap 1.00 0.91
EV to Revenue EV/Rev 1.68 2.31
Price to Book Value [P/B] P/B 1.47 2.97
Price to Earnings [P/E] P/E 13.00 29.62
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 46.14 7.41
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 19.66
Dividend per Basic Share Div per Share (Qtr) 0.00 1.49
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 37.69
Interest Coverage Int. cover (Qtr) 13.79 -9.19
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 23.49 -17.83
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -0.21 30.27
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 16.34
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -28.13 62.82
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -20.45 35.62
EBIT Growth (1y) % EBIT 1y % (Qtr) -28.10 56.25
EBT Growth (1y) % EBT 1y % (Qtr) -29.89 52.70
EPS Growth (1y) % EPS 1y % (Qtr) -26.14 48.20
FCF Growth (1y) % FCF 1y % (Qtr) -9.96 15.47
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -9.77 16.55
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.23 0.38
Cash Payout Ratio Cash Payout (Qtr) 0.00 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) 0.24 0.23
Interest Cover Ratio Int Coverage (Qtr) 13.79 -9.19
Times Interest Earned Times Interest Earned (Qtr) 13.79 -9.19
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 20.40 14.01
EBIT Margin % EBIT Margin % (Qtr) 18.24 13.05
EBT Margin % EBT Margin % (Qtr) 16.92 12.25
Gross Margin % Gross Margin % (Qtr) 37.00 40.49
Net Profit Margin % Net Margin % (Qtr) 12.90 9.63