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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Erie Indemnity Company (XNAS:ERIE) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
ERIE
Name:
ERIE INDEMNITY COMPANY (XNAS:ERIE)
Sector:
8.10M
Industry:
Insurance Brokers
CEO:
Mr. Timothy NeCastro
Total Employees:
5,805
Our Technological Advancement Rating
Our Rating:
-
-
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF ERIE INDEMNITY COMPANY(ERIE) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND INSURANCE BROKERS INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
215.59
One Month Price Target:
$216.04
Six Month Price Target :
$218.32
Likely Price in One Year's Time:
Ticker:
$221.04
Likely Trading Range Today Under (Normal Volatility)
$214.9
Price Upper limit ($) :
$216.53
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$205.85
This week:
$193.8
This month :
$172.02
Other Primary facts
Market Cap:
10.28B
Market Cap Classification:
Mid Cap
Number of Shares
IPO Date:
46.19M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
18.02%
-14.97%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$260.79
$239.96
$170.39
$191.22
Medium risk (<10%) entry points
Buy Call
Sell Call
$233.18
Buy Put:
Sell Put:
$228.74
$197.94
$202.44
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
ERIE
Sharpe Ratio:
2.18%
Comparison:
ERIE, is amongst the top 40% stocks with highest risk-adjusted returns
Sharpe ratio is -6.30% lower than the industry
& is -4.55% lower than the market/S&P 500 average
Average Returns/Yield of
ERIE
Daily returns:
0.06%
Weekly returns:
0.29%
Monthly returns:
1.15%
Yearly returns:
6.97%
Comparison of returns:
Average annual returns/yield (last 3 years) is 97.28% above industry average
Classification:
ERIE, is amongst the top 40% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.32
Statistical test of Returns:
ERIE has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.23%
Weekly Volatility:
4.98%
Monthly Volatility:
9.97%
Yearly Volatility:
34.52%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
1.67%
Volatility in last five trading days has been -24.84% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-4.52%
Weekly VaR:
-10.10%
Monthly VaR:
-20.21%
How Much Can the price of
ERIE
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-17%
Worst case (decline):
-70.01%
This translates to price declining to:
$178.48
This translates to price declining to:
$64.66
Severe Crash Probability
Risk of crash in next 6/12 months: High (50-70%)
What is Value at Risk (VaR)?
Risk Fundamentals
ERIE is a 42.64% riskier investment compared to the market/S&P 500 & is 22.20% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -12.80% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
ERIE
Beta in relation to market/S&P 500--0.38
Expected beta in 1 year's time:
0.473
Expected beta in 3 year's time:
0.668
Unlevered (debt free) Beta:
0.357
Beta in relation to Nasdaq (XNAS):
0.396
Beta in relation to all global stocks::
0.569
Beta Comparison & Analysis
Beta of competitors/peers::
0.998
Beta is -62.28% lower than peers
Average Industry Beta:
0.675
Beta is -44.22% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
6.92%
Sustainable growth rate is -43.94% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.080
Alpha is -1104.85% below industry average alpha yield
Alpha is 511% higher than market/& is unsustainably high
Analysis of Cost of Capital of
ERIE
Equity cost of capital:
0.057
Equity cost of capital is -26.30% below industry mean WACC
Unlevered (without debt) cost of capital:
5.44%
Before-tax cost of debt:
4.42%
After-tax cost of debt:
3.49%
Overall debt rating:
Lower BB medium grade (Fifth highest grade)
Weighted average cost of capital (WACC):
3.49%
WACC is -11.26% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$58.24
Revenue growth rate per share of (3Y):
7.46
Annual revenue growth rate is -93.14% below industry average
EPS:
$5.02
Expected Annual growth rate of EPS (3Y):
-9.14%
Expected future EPS growth rate is -154.11% lower than the Insurance Brokers industry
Free cash flow (FCF) per share:
$4.51
Balance sheet equity growth per share: 23.22%
Equity growth rate per share is -61337.18% lower than the industry
Debt per share
$1.97
EBITDA per share
$8.11
Valuation Analysis Today of
ERIE
P/E Ratio:
38.43
P/E Ratio of Competitors/Peers:
27.02
P/E ratio is 42.23% higher than main peers & is -29.40% lower than the industry
Stock price/value with industry average P/E ratio: $273.25
ERIE is -21.10% undervalued if valued using industry average P/E ratio
-
-
P/S (Price to Sales ratio):
3.7
Price to sales ratio is 16.51% above the industry mean
P/B (Price to book value ratio):
7.46
Price to free cash flow: 47.75
Price to free cash flow ratio is -6.94% lower than the industry
Net income growth rate (3Y):
3.34%
Net income growth rate is -100.12% lower than the industry average net income growth rate
Dividend Analysis
Dividend payout rate: 17.65%
Dividend yeild: 1.99%
Previous Dividend: $1.11
Previous adjusted dividend: $1.11
Previous Dividend: $4.29
Expected next dividend best case: $1.36
Expected next dividend worst case: $0.86
Average dividend payment (long-term): $1.11
Average dividend increase/decrease (growth rate) % per period: 6.63%
Expected next dividend payment date: 19/07/2022
Expected next dividend record date: 07/04/2022
Expected next dividend declaration date: 18/05/2022
Previous dividend payment date: 20/04/2022
Previous dividend record date: 04/05/2022
Previous dividend declaration date: 17/02/2022
Dividend History:
2022-04-04--$1.11
2021-10-04--$1.04
2021-04-05--$1.04
2022-01-04--$1.11
2021-07-02--$1.04
2021-01-04--$1.04
Dividend growth rate is -148.50% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
6.83%
Net debt to equity ratio:
-3.60%
Debt to assets ratio:
4.10%
Net debt to assets ratio:
-2.16%
Debt-to-asset ratio is -91.64% below industry average
Ability to repay debt:
Interest coverage ratio:
90.92
Interest coverage ratio is 1443.59% more than industry average
Looking forward:
Debt growth rate:
-2.12%
Annual debt growth is -100% lower than industry average debt growth rate
Debt repayment rate in last quarter: 0.57%
Analysis of Key Statistics
Correlation of price movement with the market:
0.355
Statistical significance of correlation:
ERIE has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.616
Stock price is -42.33% less correlated with the market compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.616
Correlation of price movement with Nasdaq (^IXIC):
-0.047
Covariance of price movement with the market:
-0.061
Kurtosis
16.224
Returns have severe fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are considerably more likely, compared to assets with normally distributed returns
Skewness of returns:
0.661
Returns are right (positive) skewed; mean returns are greater than median and mode returns
Fundamental Analysis & Dupont Analysis of
ERIE
Gross Profit Margin Ratio:
-
Operating Profit Margin Ratio:
0.00%
-
Net Profit Margin Ratio:
-
Effective Tax Rate:
20.97%
Effective tax rate is 38.34% higher than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
21.95%
Return on equity (ROE) is 68.40% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
13.17%
Return on assets (ROA) is 138.18% higher than the industry
Financial Leverage:
1.0x
Current Ratio:
0
-
Cash Conversion Cycle (days):
66.4
Cash conversion cycle is -85.98% below industry average
The remaining useful life of property plant & equipment is: 4.3 years
Stock based compensation to net income ratio:
-
In-depth Efficiency Analysis
Revenue generated per employee:
463.5K
Each employee generates 79% more revenue than industry average revenue per employee
EBITDA generated per employee:
64.6K
Each employee generates 71% more EBITDA than industry average revenue per employee
Profit generated per employee:
50.5K
Each employee generates 146% more net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
1.4K
Each employee generates -71% less free cash flow than industry average revenue per employee
Assets/Capital per employee
0.0K
Each employee generates -71% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
ERIE
EAST WEST BANCORP, INC. (XNAS:EWBC)
MORNINGSTAR, INC. (XNAS:MORN)
Cboe Global Markets, Inc. (BATS:CBOE)
LPL FINANCIAL HOLDINGS INC. (XNAS:LPLA)
COMMERCE BANCSHARES, INC. (XNAS:CBSH)
SEI INVESTMENTS COMPANY (XNAS:SEIC)
HBANO
ARES CAPITAL CORPORATION (XNAS:ARCC)
FIRST CITIZENS BANCSHARES, INC. (XNAS:FCNCA)
Current Analyst Ratings
Strong buy�4%
Buy�0%
Hold�4%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Strong buy
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
2.69B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
-
-
-
-
-
-
-
-
-
4.12M
-
374.77M
-
292.91M
370.64M
77.73M
292.91M
Statement of Cash Flow
Date:
Period:
-
Differed Income Tax :
-
Stock Based Compensation :
-
Change in Working Capital :
-
Accounts Receivables:
-
Other Working Capital:
-
Other Non-Cash Items:
-
Net Cash Provided by Operating Activities:
-
Investments in PP&E:
- 15458.00K
Net Acquisitions:
-
Purchases of Investments:
- 95674.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
141.31M
46.16M
187.46M
478.75M
-
-
-
396.07M
-
-
1.00B
-
-
-
2.22B
2.22B
474.38M
2.13M
-
34.87M
-
511.38M
91.18M
-
108.67M
486.94M
889.65M
2.17M
2.51B
- 50477.0K
-
March 31, 2022 at 6:00:00 AM
2.32B
1.33B
2.22B
1.05B
93.31M
- 47996.0K
100.35M
- 2945.00K
- 13732.00K
- 525.00K
-
-
- 51693.00K
-
- 52218.00K
-
- 42397.00K
141.31M
183.70M
-
- 15458.00K
8.10M
Our Proprietary Portfolio Rating
Our Rating:
-
Price Forecast/Expected Price in Next 5 Years of
ERIE
2023
2024
2025
2026
2027
$212.78
$218.16
$223.68
$229.34
$235.14