Buying Intact Financial Group

ImageAnother company passing my basic screening is Intact Financial Corp. (IFC.TO).

Intact is the leading Canadian provider of car, home and business insurance.  Intact operates three brands:

  • Intact Insurance, focused on broker-sold insurance
  • Belairedirect, focused on direct insurance sales by phone or online
  • Grey Power, focused on drivers over 50 years of age

In 2011 Intact bought AXA Canada, which it rolled into its Intact Insurance line.

Screen Shot 2013-05-31 at 10.22.41 AMI have analyzed the stock using my usual procedures.  The results are as follows.

  • The P/E Ratio is 11.89, which is lower than the historical average of 13.00, and the Graham Number is $63.80
  • The Dividend Yield is 3.00%, and the coverage is 280%
  • Forecast Growth Rate is 11.88%
  • The Gordon Return (Dividend + Growth) is 14.88%
  • The Margin of Safety at current prices is -4%, which is low due to the low book value of $36.70.  The P/B RATIO IS 1.6.  However, I think that the  relatively rich P/B Ratio is justified by the strong growth forecasts.

I would have preferred the price to be a little nearer to book value, but I think the stock is well priced here.

  • Buy IFC.TO @ $58.60

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