TWFG, Inc. (NASDAQ: TWFG)

Sector: Financial Services Industry: Insurance Brokers CIK: 0002007596
Market Cap 274.08 Mn
P/B 3.45
P/E 41.48
P/S 1.20
ROIC (Qtr) 19.57
Div Yield % 0.00
Rev 1y % (Qtr) 21.30
Total Debt (Qtr) 9.02 Mn
Debt/Equity (Qtr) 0.11
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About

Investment thesis

Bull case

  • Strong operating cash flow of 51.81M provides robust 5.75x coverage of total debt 9.02M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 162.54M provide 48.53x coverage of short-term debt 3.35M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 219.78M provides 24.37x coverage of total debt 9.02M, indicating robust asset backing and low credit risk.
  • Operating cash flow of 51.81M provides exceptional 162.42x coverage of interest expenses 319000, showing strong debt service capability.
  • Operating cash flow of 51.81M provides strong 10.55x coverage of stock compensation 4.91M, indicating sustainable incentive practices.

Bear case

  • Operating cash flow of 51.81M barely covers its investment activities of (67.21M), with a coverage ratio of -0.77, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 51.81M provides thin coverage of dividend payments of (18.06M) with a -2.87 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Operating earnings of 10.24M show weak coverage of depreciation charges of 16.91M, with a 0.61 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of 48.81M represents just -25.73x of debt issuance (1.90M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Operating cash flow of 51.81M is outpaced by equity issuance of (7.12M) (-7.28 ratio), indicating concerning reliance on equity markets for funding operations.

Asset Acquisition Breakdown of Revenue (2024)

Peer comparison

Companies in the Insurance Brokers
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 AON Aon plc 70.39 Bn 19.05 4.10 15.89 Bn
2 AJG Arthur J. Gallagher & Co. 54.84 Bn 36.71 3.93 13.49 Bn
3 WTW Willis Towers Watson Plc 19.93 Bn 59.66 5.32 5.91 Bn
4 BRO Brown & Brown, Inc. 19.47 Bn 80.03 11.73 7.86 Bn
5 ERIE Erie Indemnity Co 13.20 Bn 70.61 8.51 0.00 Bn
6 CRVL Corvel Corp 2.55 Bn 24.11 2.71 0.02 Bn
7 ARX Accelerant Holdings 1.78 Bn 65.50 2.96 0.12 Bn
8 GSHD Goosehead Insurance, Inc. 1.28 Bn 42.19 3.61 0.35 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.32 0.36
EV to Cash from Ops. EV/CFO 2.17 12.25
EV to Debt EV to Debt 12.47 7.89
EV to EBIT EV/EBIT 10.98 12.89
EV to EBITDA EV/EBITDA 2.56 10.03
EV to Free Cash Flow [EV/FCF] EV/FCF 2.30 0.82
EV to Market Cap EV to Market Cap 0.41 -2,042.77
EV to Revenue EV/Rev 0.49 2.24
Price to Book Value [P/B] P/B 3.45 2.88
Price to Earnings [P/E] P/E 41.48 21.56
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.37 1.26
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 32.25
Dividend per Basic Share Div per Share (Qtr) 0.00 0.99
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 18.58
Interest Coverage Int. cover (Qtr) 32.09 -4.31
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -829.41 -64.94
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -19.10 1.65
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 -3.13
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 139.90 -0.20
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 18.79 -8.63
EBIT Growth (1y) % EBIT 1y % (Qtr) 161.25 17.79
EBT Growth (1y) % EBT 1y % (Qtr) 151.42 32.64
EPS Growth (1y) % EPS 1y % (Qtr) 0.00 -77.22
FCF Growth (1y) % FCF 1y % (Qtr) 41.04 -60.35
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 29.39 44.50
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.65 0.62
Cash Payout Ratio Cash Payout (Qtr) 0.33 0.18
Cash Ratio Cash Ratio (Qtr) 3.60 0.51
Current Ratio Curr Ratio (Qtr) 4.68 2.20
Debt to Equity Ratio Debt/Equity (Qtr) 0.11 0.87
Interest Cover Ratio Int Coverage (Qtr) 32.09 -4.31
Times Interest Earned Times Interest Earned (Qtr) 32.09 -4.31
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 11.90 -2.17
EBIT Margin % EBIT Margin % (Qtr) 4.49 -69.72
EBT Margin % EBT Margin % (Qtr) 4.35 -8.04
Gross Margin % Gross Margin % (Qtr) 43.10 50.03
Net Profit Margin % Net Margin % (Qtr) 2.90 -10.75