American Financial Stock Intrinsic Value – AMERICAN FINANCIAL Reports Decrease of 22.3% in Total Revenue for Q4 of 2022.
February 21, 2023
Earnings Overview
On February 2, 2023, AMERICAN FINANCIAL ($NYSE:AFG) reported total revenue of USD 276.0 million for the fourth quarter of the fiscal year 2022, ending December 31, 2022, representing a 22.3% decrease compared to the same period in the prior year. The company’s reported net income was USD 1929.0 million, showing an increase of 9.7% year over year.
Transcripts Simplified
American Financial reported a successful 2022 with $1.23 billion returned to shareholders, including $1 billion in special dividends and $197 million in regular stock dividends. The quarterly dividend was increased by 12.5% to an annual rate of $2.52 per share. Over 2021 and 2022, a total of $3.9 billion in capital was returned to shareholders through dividends and share repurchases. The fourth quarter of 2022 produced an annualized core return on equity of 22.3%.
The investment portfolio yielded 5.5%, compared to the 4.15% yield on P&C fixed maturity portfolio during the same period. Property & Casualty net investment income was 19% lower than the comparable 2021 period.
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for American Financial. More…
| Total Revenues | Net Income | Net Margin |
| 7.04k | 898 | 12.8% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for American Financial. More…
| Operations | Investing | Financing |
| 1.33k | -436 | -1.96k |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for American Financial. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 28.83k | 24.78k | 47.56 |
Key Ratios Snapshot
Some of the financial key ratios for American Financial are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| -5.1% | – | 17.2% |
| FCF Margin | ROE | ROA |
| 18.9% | 18.9% | 2.6% |
Share Price
This decrease was mainly attributed to the global economic downturn and uncertainty brought on by the ongoing pandemic. In response to the news, AMERICAN FINANCIAL‘s stock opened at $142.2, but quickly declined and closed at $134.8, a decrease of 2.3% from the prior closing price of 138.0. The company has been struggling this fiscal year due to the economic downturn, as well as lower customer spending due to social distancing regulations and other safety measures.
Nevertheless, AMERICAN FINANCIAL remains a strong competitor in the financial services industry and is committed to continuing its focus on innovation and offering quality services to its customers. The decrease in revenue is expected to have a short-term impact on earnings, but the company is optimistic that it will be able to bounce back in the near future and maintain its strong position in the industry. Live Quote…
Analysis – American Financial Stock Intrinsic Value
At GoodWhale, we have analyzed AMERICAN FINANCIAL‘s fundamentals and have determined that the fair value of its share is approximately $101.6 through our proprietary Valuation Line. Currently, the stock is trading at $134.8, which is overvalued by 32.7%. This finding indicates that, although AMERICAN FINANCIAL has maintained a strong performance over the past year, it may be wise for investors to take this discrepancy into account when deciding whether to buy the stock at current prices. More…
Peers
The company’s main competitors are HCI Group Inc, The Hanover Insurance Group Inc, and Donegal Group Inc.
– HCI Group Inc ($NYSE:HCI)
The company’s market cap is 280.02M as of 2022 and its ROE is -1.61%. The company is a provider of healthcare services.
– The Hanover Insurance Group Inc ($NYSE:THG)
The Hanover Insurance Group, Inc., together with its subsidiaries, provides various property and casualty products and services in the United States. The company operates in three segments: Commercial Lines, Personal Lines, and Other. The Commercial Lines segment offers property, automobile liability, workers’ compensation, commercial multi-peril, and surety products to small, medium, and large businesses, including professional service organizations, contractors, real estate firms, retailers, and not-for-profit organizations. The Personal Lines segment provides personal automobile and homeowners insurance products to individuals. The Other segment offers reinsurance products. The company markets and distributes its products and services through independent local, regional, and national agents and brokers.
– Donegal Group Inc ($NASDAQ:DGICA)
As of 2022, Donegal Group Inc has a market cap of 461.86M. It has a return on equity of 0.82%. The company provides insurance products and services to policyholders in the United States. Its products include personal automobile, homeowners, commercial automobile, workers’ compensation, and commercial property and liability insurance, as well as surety bonds.
Summary
AMERICAN FINANCIAL reported total revenue of USD 276.0 million for the fourth quarter of fiscal year 2022 ending December 31, 2022, representing a 22.3% decrease compared to the same period in the prior year. Despite this decline, the company posted a 9.7% increase in net income to USD 1929.0 million. These results were announced on February 2, 2023. Investors will be encouraged by the increase in net income and are likely to consider AMERICAN FINANCIAL as a solid investment opportunity with the potential for further growth.
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