Reinsurance Group of America Stock Shows Every Sign Of Being Modestly Undervalued

GuruFocus.com
·4 min read

- By GF Value

The stock of Reinsurance Group of America (NYSE:RGA, 30-year Financials) gives every indication of being modestly undervalued, according to GuruFocus Value calculation. GuruFocus Value is GuruFocus' estimate of the fair value at which the stock should be traded. It is calculated based on the historical multiples that the stock has traded at, the past business growth and analyst estimates of future business performance. If the price of a stock is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. On the other hand, if it is significantly below the GF Value Line, its future return will likely be higher. At its current price of $127.43 per share and the market cap of $8.7 billion, Reinsurance Group of America stock appears to be modestly undervalued. GF Value for Reinsurance Group of America is shown in the chart below.


Reinsurance Group of America Stock Shows Every Sign Of Being Modestly Undervalued
Reinsurance Group of America Stock Shows Every Sign Of Being Modestly Undervalued

Because Reinsurance Group of America is relatively undervalued, the long-term return of its stock is likely to be higher than its business growth, which averaged 5.2% over the past three years and is estimated to grow 2.78% annually over the next three to five years.

Link: These companies may deliever higher future returns at reduced risk.

It is always important to check the financial strength of a company before buying its stock. Investing in companies with poor financial strength have a higher risk of permanent loss. Looking at the cash-to-debt ratio and interest coverage is a great way to understand the financial strength of a company. Reinsurance Group of America has a cash-to-debt ratio of 0.86, which is worse than 69% of the companies in Insurance industry. The overall financial strength of Reinsurance Group of America is 4 out of 10, which indicates that the financial strength of Reinsurance Group of America is poor. This is the debt and cash of Reinsurance Group of America over the past years:

Reinsurance Group of America Stock Shows Every Sign Of Being Modestly Undervalued
Reinsurance Group of America Stock Shows Every Sign Of Being Modestly Undervalued

Companies that have been consistently profitable over the long term offer less risk for investors who may want to purchase shares. Higher profit margins usually dictate a better investment compared to a company with lower profit margins. Reinsurance Group of America has been profitable 10 over the past 10 years. Over the past twelve months, the company had a revenue of $14.6 billion and earnings of $6.13 a share. Its operating margin is 0.00%, which ranks in the bottom 10% of the companies in Insurance industry. Overall, the profitability of Reinsurance Group of America is ranked 5 out of 10, which indicates fair profitability. This is the revenue and net income of Reinsurance Group of America over the past years:

Reinsurance Group of America Stock Shows Every Sign Of Being Modestly Undervalued
Reinsurance Group of America Stock Shows Every Sign Of Being Modestly Undervalued

Growth is probably the most important factor in the valuation of a company. GuruFocus research has found that growth is closely correlated with the long term performance of a company's stock. The faster a company is growing, the more likely it is to be creating value for shareholders, especially if the growth is profitable. The 3-year average annual revenue growth rate of Reinsurance Group of America is 5.2%, which ranks in the middle range of the companies in Insurance industry. The 3-year average EBITDA growth rate is -16.9%, which ranks worse than 82% of the companies in Insurance industry.

One can also evaluate a company's profitability by comparing its return on invested capital (ROIC) to its weighted average cost of capital (WACC). Return on invested capital (ROIC) measures how well a company generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. If the return on invested capital exceeds the weighted average cost of capital, the company is likely creating value for its shareholders. During the past 12 months, Reinsurance Group of America's ROIC is 0.70 while its WACC came in at 7.50. The historical ROIC vs WACC comparison of Reinsurance Group of America is shown below:

Reinsurance Group of America Stock Shows Every Sign Of Being Modestly Undervalued
Reinsurance Group of America Stock Shows Every Sign Of Being Modestly Undervalued

In short, The stock of Reinsurance Group of America (NYSE:RGA, 30-year Financials) appears to be modestly undervalued. The company's financial condition is poor and its profitability is fair. Its growth ranks worse than 82% of the companies in Insurance industry. To learn more about Reinsurance Group of America stock, you can check out its 30-year Financials here.

To find out the high quality companies that may deliever above average returns, please check out GuruFocus High Quality Low Capex Screener.

This article first appeared on GuruFocus.

Recommended Stories

  • New COVID-19 restrictions to impact French growth - minister

    PARIS (Reuters) -New COVID-19 restrictions in France will impact economic growth this year but it is too early to say by how much, Finance Minister Bruno Le Maire said on Friday. President Emmanuel Macron on Wednesday ordered France into its third national lockdown and said schools would close for three weeks as he sought to push back a third wave of COVID-19 infections that threatens to overwhelm hospitals. Le Maire reiterated that the new lockdown measures would force the temporary closure of 150,000 businesses at a cost of 11 billion euros per month.

  • Power play - India wields oil 'weapon' to cut dependence on Saudi

    When India's government last month asked refiners to speed up diversification and reduce dependence on the Middle East - days after OPEC+ said it would maintain production cuts - it sent a message about its clout and foreshadowed changes to the world's energy maps. It was a move that had been in the works for years, fuelled by repeated comments from Indian Oil Minister Dharmendra Pradhan, who in 2015 called oil purchases a "weapon" for his country. When the Organisation of Oil Exporting Countries and Major Producers (OPEC+) extended the production cuts into April, India unsheathed that weapon.

  • Top NBC News anchor says 'fairness is overrated'

    Conservative commentator Dinesh D'Souza and 'The Federalist' senior editor Mollie Hemingway weigh in on 'The Ingraham Angle'

  • Matt Gaetz reportedly received talking-to about 'acting professionally' in Congress by House staff during first term, per CNN

    A spokesperson for the Florida representative denied any such conversation took place between Gaetz and then-House Speaker Paul Ryan or his staff.

  • Mom killed 6-year-old with cocaine, other drugs for insurance money, Texas police say

    A Texas mom is charged with capital murder in the death of her 6-year-old son.

  • Did ‘Law & Order’ Just Open the Door for Benson and Stabler to Finally Hook Up?

    NBCThis post contains spoilers for Law & Order: SVU and Law & Order: Organized Crime.Reunited, and it feels so... well, not good, really. On Thursday night, Law & Order finally reunited NBC’s most beloved platonic couple: After a decade apart, Mariska Hargitay’s Olivia Benson and Christopher Meloni’s Elliot Stabler are back on the case. Unfortunately, it took the death of Stabler’s wife, Kathy, at the hands of a mysterious, high-level criminal to make it happen.Thursday marks the premiere of Meloni’s new Law & Order spinoff, Organized Crime. Given the magnitude of Benson and Stabler’s (Babe-ler’s?) reunion, it should come as no surprise that NBC blew the event up into a crossover event with SVU—which opened on Kathy Stabler being wheeled into an ambulance as a stunned Olivia looked on. Apparently, despite the fact that the Stablers have been living overseas, they’ve become a bombing target here in the U.S. Maybe it has something to do with Elliot’s new job?As Stabler explains, he went on a walkabout for a few years after his departure from the NYPD; he began working private security and eventually, he wound up working as an international liaison handling terrorism, sex-trafficking, and organized crime. He came to New York to testify on a case, and Kathy had tagged along. Apparently, the police placard in their rental car tipped off the bomber.Kathy initially survived the attack, but later died in the hospital of a ruptured spleen. Benson and her team are able to track down the suspected bomber, but soon enough he, too, is found dead in his cell from an overdose. The explosive appears to have been an international design.Life After ‘SVU’: Christopher Meloni on ‘They Came Together,’ Stabler, and His Famous BehindSadly for Kathy, her brush with death is mostly just a plot device to bring Benson and Stabler together (and, of course, launch Stabler’s new standalone TV gig). Benson volunteers to lead the bombing investigation, and allows her old partner to accompany her during the first interrogation, where they question a QAnon devotee. It quickly becomes clear, however, that the perpetrator in this case is someone far more sophisticated.A lot has changed since last time Stabler appeared onscreen. In his latter seasons, especially, Meloni’s character became known for his hot temper and propensity for bending the rules—qualities that have not aged well in light of recent discussions of how cop procedurals have promoted harmful ideas about policing. So as Stabler made his grand return, viewers also got a healthy dose of hand-wringing about how “good” or “bad” of a cop he might be now. “Don’t tell me, ‘We don’t do it that way anymore, please,’” Stabler tells Benson at one point. “I’ve been living out of New York, not under a rock.” Vouching for his former colleague to a newer peer, Finn insists, “End of the day, he’s a good cop.”Eventually, Stabler loses his cool over the questions: “I’m pretty sick of people judging me for who I was 12 years ago,” he says. “I was a good cop then, I’m a good cop now.”As Ayanna Bell, the organized crime officer in charge of hunting down the criminal element responsible for his wife’s apparent murderer, shoots back, “Guys who came up when you did, you guys never think you need to change your ways.”But the chief order of business in hour one of this crossover event, naturally, was addressing the distance that’s festered between Stabler and Benson in their decade apart.It’s been 10 years since Benson and Stabler worked a case together. Meloni’s last episode, the Season 12 finale, ended with Stabler shooting the daughter of a rape victim, who’d open fire in the NYPD precinct with a gun she’d purchased off the street. In subsequent episodes, Benson learned her longtime partner had resigned. The two have not spoken since.“Are you sorry for leaving, or are you sorry for walking—for not giving me the courtesy of telling me?” Benson asks. “You were the single most important person in my life. And you just... disappeared.”“I know,” Elliot replies. “I was afraid. If I heard your voice, I wouldn’t have been able to leave.”Stabler and Benson’s partnership was always, erm, shall we say... intense? That fact came up Thursday night as well, as newer squad members, including Amanda Rollins, hint at the ambiguous “thing” the pair notoriously shared. Stabler seems curious when Finn mentions Olivia’s romantic relationships, and tries to glean some information out of his old colleague—only to be told he’ll need to ask himself.At the risk of sounding crass about poor Kathy’s death, her tragic fate does prompt one, yes, very crass question: Are we finally, after all these years, going to see Stabler and Benson kiss? Pretty please?Right now, however, Stabler obviously has bigger fish to fry. Kathy’s murder case is officially out of Benson’s jurisdiction, although that’s no guarantee she’ll stand down. Stabler’s youngest son, Eli, is shattered over his mother’s death and despondent that the family will not be returning to Rome. (Sadly, NBC apparently does not have the funds to give us Law & Order Takes Tuscany.) Stabler himself, meanwhile, has already begun grilling international criminals and chasing down leads, continually referring back to a smuggling case he’d been working in Puglia. Turns out, medical supplies have become a lucrative source of money for organized crime rings during COVID times. At the root of all this, it seems, is Freddie (Dylan McDermott)—the son of a notorious mob boss named Sinatra (yes, Sinatra) whose goons were also behind the Puglia PPE smuggling. Freddie, who also goes by the name Richard Wheatley, enjoys an upper-crust existence, painting himself as a legitimate businessman. Even Sinatra seemed ready to rat his son out to Stabler—but unfortunately, Freddie got to him first and executed him on the Wonder Wheel in Coney Island. Now, the chase is afoot. It seems likely that this case will consume a good portion of Organized Crime’s premiere season, or at least provide its early narrative backbone. But once the fog clears and the gavel inevitably falls, there will be time for other, longer-simmering questions—including, yes, whether after all these years, fans might finally get to see Benson and Stabler reconcile and, eventually, smooch. For now, however, we’ll have to wait and see.Read more at The Daily Beast.Get our top stories in your inbox every day. Sign up now!Daily Beast Membership: Beast Inside goes deeper on the stories that matter to you. Learn more.

  • Train crash kills 48 in Taiwan's deadliest rail tragedy for decades

    A Taiwan express train with almost 500 aboard derailed in a tunnel on Friday, killing at least 48 passengers and injuring 66 in the island's worst rail disaster in almost four decades. The crash, north of the eastern city of Hualien, killed the driver of the train carrying many tourists and people heading home at the start of a long weekend traditional holiday to tend to family graves. Taiwan media said many people were standing as the train was so crowded, and were tossed about by the crash impact.

  • Donald Trump Jr. and girlfriend Kimberly Guilfoyle buy mansion 20 miles from Mar-a-Lago

    Donald Trump Jr. and his girlfriend Kimberly Guilfoyle are now Florida home owners.

  • Matt Gaetz Keeps Digging Deeper Holes for Himself

    Photo Illustration by The Daily Beast/GettyThe New Abnormal’s least favorite Florida congressman, Matt Gaetz, is in hot water over mounting allegations that he’s been involved with underage women and taking them across state lines. To discuss the burgeoning scandal, co-hosts Molly Jong-Fast and Jesse Cannon brought on The Nation’s national affairs correspondent, Jeet Heer, who says he isn’t the least bit surprised.“It’s the ones you always suspect the most,” he says.Noting Gaetz’s strange appearance on Tucker Carlson’s Fox News show, where he tried to get Carlson hitched to his sinking ship, Heer says he sees a connection with what other people in the alt-right swamp engage in. “Occasionally you see racists try to implicate the person they’re talking with, like, ‘You think this as well. You also don’t like those people right?’... To normalize this behavior. That’s basically what he’s doing: ‘Oh yeah, you remember the dinner that we were at with your wife? And wasn’t there some sort of really sleazy scandal involving you?”To Heer, Gaetz describing his dinner with a young date along with Tucker Carlson and his wife is reminiscent of the Woody Allen movie Manhattan. “In the movie, Woody is dating a 17-year-old [Mariel Hemingway]... and they go out to these dinners with their adult friends who are middle-aged.” The imagery is hard to unsee.For more strange twists in the Matt Gaetz story, Molly and Jesse brought on Daily Beast senior politics editor Matt Fuller, who says he’s been hearing rumors of Gaetz’s bad behavior for over three years.“Let’s just say he has a proclivity for younger women. He certainly has been open to dating college-aged women, congressional staffers, maybe some interns from Turning Point USA. He’s a man about town,” Fuller says.The crew agrees that you’re not in a good place when reporters are having to pin you down on the language you’re using around accused pedophilia.“It’s been very odd to hear exactly how he phrases these answers on a lot of this, because he always says, ‘I haven’t had any inappropriate relationships with underage women.’ And it’s been unclear if he’s saying underage women, like, with an age of consent, or…? We don’t know what he’s talking about.”Listen to Bonus Episodes of The New Abnormal PodcastAlso on the show, Molly sits down with one of the foremost warriors in the fight against the “anti-science” movement, vaccine scientist Dr. Peter Hotez, who talks soberly about what we have ahead of us in the COVID-19 pandemic.Plus, getting so high you end up flying from Kentucky to Kenya, how you troll Joseph Goebbels, and podcasting with the Original Gangster Villain—that’s all on the latest The New Abnormal.Listen to The New Abnormal on Apple Podcasts, Spotify and Stitcher.Read more at The Daily Beast.Get our top stories in your inbox every day. Sign up now!Daily Beast Membership: Beast Inside goes deeper on the stories that matter to you. Learn more.

  • The owners of the Ever Given are suing its operators after the massive ship spent 6 days lodged in the Suez Canal

    The owners of the giant container ship filed a lawsuit against the Evergreen Marine Corp. in the High Court in London, according to The Lawyer.

  • Biden keeps saying 'no one making under $400,000' will see their taxes go up under his proposals. But the threshold applies to households, not individuals.

    Biden says "no one making under $400,000 will see their taxes go up," but the White House says families qualify. That still only hits the richest.

  • Williams had seven seasons left on his UNC contract. It never mentions retirement.

    Williams signed a contract extension in 2018.

  • Michael Jordan speaks out on Roy Williams retirement: ‘He meant so much to basketball’

    Observer Exclusive: UNC legend and Charlotte Hornets owner Michael Jordan discusses Roy Williams’ retirement. His favorite Williams memories had nothing to do with basketball.

  • The research is in: People who've already had COVID-19 need just one shot

    Giving people who've already had COVID-19 a second dose may be a waste, since the first one already acts like a booster.

  • A US cruise line just announced a vaccine requirement. These are all the cruise lines that will require COVID-19 vaccinations for guests and crew

    Over the last month, several cruise lines have started requiring crew members or guests to receive the COVID-19 vaccine prior to sailing.

  • The 'daughter of Bengal' taking on India's PM

    West Bengal Chief Minister Mamata Banerjee is locked in a fierce election battle with Mr Modi's party.

  • Hostility and harassment against women and minorities increased with remote work during the pandemic

    A quarter of people, mainly women and nonbinary individuals, said they experienced an increase in gender-based harassment during the pandemic.

  • Taiwan train derails killing dozens

    A train in Taiwan has derailed inside a tunnel killing dozens of people.Around 70 passengers are still trapped and 40 others have been taken to hospital, in what is Taiwan's worst rail disaster in at least four decades.The train had been travelling from Taipei to Taitung when it apparently hit a truck and came off the rails north of Hualien.Images of the crash scene show carriages inside the tunnel ripped apart from the impact.Taiwan's fire department said there had been some 350 people on board the train.Many of them were reported to have been standing because it was so full.More than 80 people have been evacuated from the first four carriages, but the others are harder to reach.The accident happened at the start of the long weekend for the traditional Tomb Sweeping Day.The last major train derailment in Taiwan was in 2018, which left 18 people dead.

  • Italy approves new decree to keep cruise ships out of Venice lagoon

    Italy's government has ruled that large cruise ships and container vessels must not pass close to Venice's historic centre and should instead dock in a different location to preserve the famed lagoon. A decree approved late on Wednesday called for public consultations on building a terminal outside the lagoon where passenger vessels over 40,000 tons and container ships can berth without passing in front of Saint Mark's square. "Anyone who has visited Venice in recent years has been shocked to see these ships, hundreds of metres long and as tall as apartment buildings, passing through such fragile places," Culture Minister Dario Franceschini said on Thursday.

  • Blocked by the EU's export ban, Japan got its first AstraZeneca vaccines from the US instead

    AstraZeneca's Tomoo Tanaka told the Asahi Shimbun on Thursday that the company wanted to get the vaccine from Europe but could not.