Hanover Insurance Stock Near 52-Week High: Time to Buy?

Shares of The Hanover Insurance Group, Inc. THG closed at $175.98 on Friday, near their 52-week high of $176.71, after having gained 13.8% year to date. Shares outperformed the industry, the Finance sector, as well as the Zacks S&P 500 composite index in the same time frame. 

THG is a leading carrier with a specialty focus on small-to-midsize clients. It holds a strong market position, driven by prudent insurance solutions and the increasing influence of tech-enabled capabilities in the small commercial segment. It operates in a total addressable $78 billion market and has a market capitalization of $5.5 billion. 

Continued strong performance of Core Commercial and Specialty segments, stable retention, better pricing, strong market presence and a solid capital position drive shares.

THG Trading Above 50-Day Moving Average

THG shares are trading well above the 50-day and 200-day moving averages, indicating a bullish trend. 

 THG Price Movement vs. 50-Day, 200-Day Moving Average

Optimistic Analyst Sentiment for THG

Two analysts covering the stock have raised estimates for 2025, while one has raised the same for 2026 over the past 30 days. The consensus estimate for 2025 and 2026 has moved 2% and 0.2% north, respectively, in the past 30 days.

The Zacks Consensus Estimate for 2025 implies an 8.6% year-over-year increase, while the same for 2026 suggests a 10% increase. The expected long-term earnings growth rate is pegged at 10.4%.

THG’s Success Reflects Growth Initiatives

Hanover Insurance has evolved as a more balanced and differentiated property and casualty franchise. Growth should be driven by organic expansion, strategic partnerships with consolidators, and new agency appointments. It has a broad portfolio of specialized products and capabilities, creating distinct growth opportunities, with a key focus on expanding the Specialty business.

THG continues to prioritize profitable growth in high-potential markets while actively managing Midwest exposure to align with diversification objectives in the Personal Lines segment. In Core Commercial, solid momentum—driven by strong new business growth and improved retention—continues to support expansion.
THG continues to invest in technology to upgrade its front-end capabilities, streamline operations and enhance risk analytics.  It is ramping up technology investments to create efficiencies.

THG’s Return on Capital

Return on equity in the trailing 12 months was 18.2%, higher than the industry average of 7.8%. Return on equity, a profitability measure, reflects how effectively a company is utilizing its shareholders' equity.

Its return on invested capital (ROIC) has increased every year. This reflects THG’s efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 9.5%, higher than the industry average of 6%.

THG Shares Are Expensive

The stock is overvalued compared to its industry. It is currently trading at a price-to-book multiple of 2.08, higher than the industry average of 1.61. It also has a Value Score of B.
 

Shares of other reinsurers like Everest Group, Ltd. EG and RenaissanceRe Holdings Ltd. RNR are also trading at a discount to the industry average.

Average Target Price for THG Suggests an Upside

Based on short-term price targets offered by seven analysts, the Zacks average price target is $186.71 per share. The average suggests a potential 6.1% upside from Friday’s closing price.

What to Do With THG Stock?

This insurer aims to be the premier P&C franchise in the independent agency channel.  THG is well-positioned for growth, driven by a diverse product portfolio, widespread profitability, pricing flexibility and a disciplined approach to investment management. 

The insurer’s dividend history is impressive. It has been hiking dividends for the last 20 years, apart from paying special dividends. Its dividend yield of 2.2% is better than the industry average of 0.5%, making it an attractive pick for yield-seeking investors.  

A positive growth projection, a higher target price and a VGM Score of A instill confidence in the stock.

However, THG’s unfavorable leverage and times interest earned keep us cautious on this Zack Rank #3 (Hold) stock. Also, given its premium valuation, new investors can wait for a better entry point.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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