Analyzing The Hanover Insurance Group (NYSE:THG) & Manulife Financial (NYSE:MFC)

Manulife Financial (NYSE:MFC) and The Hanover Insurance Group (NYSE:THG) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, risk, profitability, earnings and valuation.

Risk and Volatility

Manulife Financial has a beta of 0.84, suggesting that its stock price is 16% less volatile than the S&P 500. Comparatively, The Hanover Insurance Group has a beta of 0.23, suggesting that its stock price is 77% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Manulife Financial and The Hanover Insurance Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Manulife Financial	0	1	4	2	3.14
The Hanover Insurance Group	0	5	3	2	2.70

Manulife Financial presently has a consensus target price of $58.75, suggesting a potential upside of 28.88%. The Hanover Insurance Group has a consensus target price of $231.43, suggesting a potential downside of 3.42%. Given Manulife Financial’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Manulife Financial is more favorable than The Hanover Insurance Group.

Dividends

Manulife Financial pays an annual dividend of $1.38 per share and has a dividend yield of 3.0%. The Hanover Insurance Group pays an annual dividend of $3.80 per share and has a dividend yield of 1.6%. Manulife Financial pays out 51.5% of its earnings in the form of a dividend. The Hanover Insurance Group pays out 18.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Manulife Financial has raised its dividend for 12 consecutive years and The Hanover Insurance Group has raised its dividend for 20 consecutive years.

Institutional and Insider Ownership

52.6% of Manulife Financial shares are owned by institutional investors. Comparatively, 86.6% of The Hanover Insurance Group shares are owned by institutional investors. 0.0% of Manulife Financial shares are owned by insiders. Comparatively, 2.8% of The Hanover Insurance Group shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Manulife Financial and The Hanover Insurance Group”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Manulife Financial	$43.63 billion	1.73	$4.14 billion	$2.68	17.01
The Hanover Insurance Group	$6.73 billion	1.24	$662.50 million	$20.95	11.44

Manulife Financial has higher revenue and earnings than The Hanover Insurance Group. The Hanover Insurance Group is trading at a lower price-to-earnings ratio than Manulife Financial, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Manulife Financial and The Hanover Insurance Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Manulife Financial	9.99%	16.68%	0.75%
The Hanover Insurance Group	11.17%	21.72%	4.61%

Summary

Manulife Financial beats The Hanover Insurance Group on 9 of the 17 factors compared between the two stocks.

About Manulife Financial

Manulife Financial Corporation, together with its subsidiaries, provides financial products and services in the United States, Canada, Asia, and internationally. The company operates through Wealth and Asset Management Businesses; Insurance and Annuity Products; and Corporate and Other segments. The Wealth and Asset Management Businesses segment offers investment advice and solutions to retirement, retail, and institutional clients through multiple distribution channels, including agents and brokers affiliated with the company, independent securities brokerage firms and financial advisors pension plan consultants, and banks. The Insurance and Annuity Products segment provides deposit and credit products; and individual life insurance, individual and group long-term care insurance, and guaranteed and partially guaranteed annuity products through multiple distribution channels, including insurance agents, brokers, banks, financial planners, and direct marketing. The Corporate and Other segment is involved in the property and casualty reinsurance businesses; and run-off reinsurance operations, including variable annuities, and accident and health. The company also manages timberland and agricultural portfolios; and engages in insurance agency, investment counseling and dealer, portfolio and mutual fund management, property and casualty insurance, and mutual fund dealer businesses. In addition, it provides integrated banking products and services. The company was incorporated in 1887 and is headquartered in Toronto, Canada.

About The Hanover Insurance Group

The Hanover Insurance Group, Inc., through its subsidiaries, provides various property and casualty insurance products and services in the United States. The company operates through four segments: Core Commercial, Specialty, Personal Lines, and Other. The Commercial Lines segment offers commercial multiple peril, commercial automobile, workers' compensation, and other commercial lines coverage. The Specialty segment provides professional and executive Lines, marine, and surety and other, as well as specialty property and casualty, such as program business, specialty industrial business, excess and surplus business, and specialty general liability coverage. The Personal Lines segment offers personal automobile and homeowner's coverages, as well as other personal coverages, such as personal umbrella, inland marine, fire, personal watercraft, personal cyber, and other miscellaneous coverages. The Other segment markets investment advisory services to institutions, insurance companies, pension funds, and other organizations. The Hanover Insurance Group, Inc. markets its products and services through independent agents and brokers. The company was formerly known as Allmerica Financial Corp. and changed its name to The Hanover Insurance Group, Inc. in December 2005. The Hanover Insurance Group, Inc. was founded in 1852 and is headquartered in Worcester, Massachusetts.