Corporate Webpages Tower Group, Inc.
There are several companies in the USA with the name "Tower
Group." Some have websites, and it is easy to get confused and
get onto the wrong one. Companies with that name range from
shipping and freight logistics to financial advisory services to
protection and casualty insurance. It is the latter category
that the Tower Group Inc. (TWGP) falls into. We are not the
only ones to have made the mistake of confusing this company
with one that provides financial advice and business services
and has a large website. Barchart in its sector groupings
section also get the company confused with the other one
providing business services, and so we issued a zero for
"industry" in our Decision Matrix section normally relying on
Barchart to make comparisons of strength of various industry groups.
Call it "unfair penalization" for not having a creative-enough name.
Tower Group got its start in New York City providing commercial
insurance to small delis, dry cleaners, and family restaurants.
Tower specializes in managing risk, as smaller companies are
particularly vulnerable. It almost sounds like a "protection racket."
The company went public in 2004 and used the proceeds to expand
along the East Coast and New England, where most of its business
is concentrated today. Tower is a very high-growth company as
evidenced by the "intrinsic value" ratings, and eventually
intends to expand to being licensed in all 50 states. A typical
policy runs a small store-owner about $2,000/year and gives
Tower a 10% to 14% profit margin.
Tower must balance its desire to grow and make acquisitions with
its concern for maintaining ratings from A.M. Best which can be
damaged if the company over-expands too quickly or makes dubious
acquisitions.
This appears to be a pretty solid company and a possible
defensive play in a down stock market. It has formed a
predictable trading range and is currently at the bottom of its
channel. We consider it a "rolling stock." We are encouraged
that Dimensional Fund Advisors is a significant holder and
acquiring more shares while many other funds are dumping the stock.
The company is well-managed somewhat conservatively, and while it
presents some downside risk due to its smaller size in a
competitive market, it looks pretty safe to us. It does have an
immediate cash flow problem, however.
A growth company such as Tower Group is expected to utilize
resources to make acquisitions and grow, but this company has
diverted a substantial amount of its capital to buy back stock
shares. The reason is that the shares are below book value.
In our section on "Financial Ratios", we note the part we get
from "Barchart" also contains significant errors, showing a zero
book value and zero long term debt. The long term debt is
actually closer to $370 million and the book value is closer to $27/share.
"Barchart" has its uses, but is proving less and less reliable
and numbers eminating from there need to be checked carefully
against information from other sites.
08-23-2011: Tower Group, Inc. (TWGP): Insuring Smaller Commercial Accounts
(WAIT FOR PAGE TO LOAD COMPLETELY BEFORE LINKS WORK.)
Company Profile
Company History
News
Comparison with Peers
Bond Issue
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Financial Statements
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Scout Stock Rating
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Research Reports
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Stock Report
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Company Profile |
Company History |
News |
Comparison |
Barchart got industry group classification for this company right in some places, wrong in others. In this section it mis-classified Tower Group by getting it confused with another company of the same name and representing it as "business services" rather than "property and casualty insurance." We have left the error intact, but have omitted the criterion below from the ultimate Decision Matrix.
Similar Companies Performance:
Bond Issue |
Zenith Index |
Under current market conditions, a Zenith Index Score of 1.20 or above is required for a positive rating on this factor. 1.21 -1.30 is considered acceptable, 1.30-1.40 is consider strong and > 1.40 is considered exceptionally strong. Accounting statements in this section often contain mistakes, especially in earlier years' totals, but data is deemed sufficient for us to give a rating. More accurate financial statements follow in the next section.
Tower Group Inc. (TWGP ) Sector: Financial
120 Broadway Industry: Property & Casualty Insurance
31st Floor Exchange: Nasdaq
New York, NY 10271
Tower Group, Inc., through its subsidiaries, provides a range of
commercial, personal, and specialty property and casualty insurance
products and services to businesses in various industries and to
individuals in the United States. It offers commercial multiple-peril
packages policies that combine property, liability, business interruption,
equipment breakdown, fidelity, and inland marine coverages; fire and
allied lines policies for personal property and commercial buildings, as
well as inland marine insurance protection for the property of businesses
that is not at a fixed location and for items of personal property that
are easily transportable, including builders risk, contractors-Æ equipment
and installation, domestic transit and transportation, fine arts, property
floaters, and leased property; and other liability policies for
individuals and business owners comprising mono-line commercial general
liability and commercial umbrella policies. The company also provides
homeowner-Æs and personal dwellings, which provides property and liability
coverages for one and two-family, owner-occupied residences or additional
coverage to the homeowner for personal umbrella and personal inland
marine; workers-Æ compensation policies; and commercial and personal
as residential and commercial buildings, retail and wholesale stores, food
service establishments and restaurants, artisan contractors, and
automotive service operators. In addition, the company produces premiums
on behalf of its issuing companies, as well as provides administrative,
underwriting, claims administration, and reinsurance intermediary
services. It distributes its products through independent wholesale and
retail agents, and brokers. The company was founded in 1989 and is
headquartered in New York, New York.
Last Trade: 22.61 52-Week Range: 27.86 - 20.00
Trade Date: 08-20 Avg. Volume: 270,880 Shares
Index Membership: Employees: 1,360
Corporate Governance:
Board (Low Risk), Audit (Low Risk), Compensation (Medium
Risk), Shareholder Rights (Medium Risk).
EPS: 3.08 Dividend Amount: $ 0.75 Yield: 3.30%
Ex-Dividend Date: Sep 8, 201 Mkt Cap: $ 932,140K
Payout Ratio: 20.00%
Last Split Factor (new for old): N/A Split Date: N/A
Key Statistics:
Enterprise Value: $ 1,240,000K Revenue (ttm) : $ 1,710,000K
Gross Profit: $ 405,130K
Earnings before Income Tax, Depreciation and Amortization: $ 264,190K
Enterprise Value/Revenue (ttm): 0.73 Revenue per Share: $ 40.90
Enterprise Value/EBITDA (ttm): 4.70 Qtrly Rev Growth (y to y): 39.90%
P/E Ratio (fwd projected): 7.20 P/E Ratio (current): 7.35
P/E Growth Ratio (5 yr expected): 0.46 Operating Margin: 14.03%
Price/Sales Ratio: 0.54 Profit Margin: 7.55%
Price/Book Value: 0.86 Book Value: $ 26.01/sh.
Return on Assets: 3.95% Net Income Avl to Common: $ 129,060K
Return on Equity: 12.70% Diluted Earnings/Share: $ 3.08
Qrtly Earnings Growth (yoy): -5.90%
Balance Sheet Items : Cash Flow Items (ttm):
(most recent qrtr) (trailing 12 mo.)
Total Cash: $ 65,410K Operating Cash Flow:$ 148,670K
Total Debt: $ 376,160K Lvgd Free Cash Flow:$ 238,700K
Total Debt/Equity: 34.08
Total Cash/Share: $ 1.59
Current Ratio: 0.85
Share Statistics: Stock Price History:
Shares Outstanding: 41,230K Stk 52-Week Change: 1.34%
Float: 37,370K S&P 500 52-Wk Chng: 4.84%
Sh. Short % of Float: 10.80% 50-Day Moving Avg: 23.11
Short Ratio: 23.30 200-Day Moving Avg: 23.80
% Held by Institutions: 97.80% Beta: 0.51
% Held by Insiders: 10.23%
Analysts' Estimates: Cur. Qtr Next Qtr Cur. Year Next Year
___________________________ Sep 11 Dec 11 Dec 11 Dec 12
Average Earnings Estimate 0.74 0.78 2.62 3.14
Average Revenue Estimate 83M 390M 1,540M 1,760M
Factors Comparing This Company to Its Industry Leader (1.0 = Average):
Long Term EPS Growth Rate (5 yr): 33.750 EPS Growth (Qrtly YoY): 5.192
PEG Ratio (ttm, 5 yr expected): 289.824 P/E Ratio (ttm): 18.346
Revenue Growth (Qrtly YoY): 22.500
Annual Income Statements: All numbers in thousands)
Period Ending Dec31,2010 Dec31,2009 Dec31,2008
Total Revenue 1,458,734 983,103 484,430
Cost of Revenue 1,053,601 694,100 0
Gross Profit 405,133 289,003 484,430
Operating Expenses:
Research & Development 0 0 0
Selling, General & Administrative 0 0 386,675
Non-Recurring Expenses 0 0 0
Other Operating Expenses 195,751 129,846 0
Total Operating Expenses 0 0 0
Operating Income or Loss 184,788 141,035 97,755
Income from Continuing Operations:
Total Other Income/Expenses Net -466 0 0
Earnings Before Interest & Taxes 208,916 178,954 98,024
Interest Expense 24,594 18,122 8,449
Income Before Taxes 184,322 160,832 89,575
Income Tax Expense 62,400 51,502 32,102
Minority Interest 0 0 0
Net Income from Continuing Op.s 121,922 109,330 57,473
Non-recurring Events:
Discontinued Operations 0 0 0
Extraordinary Items 0 0 0
Effect of Accounting Changes 0 0 0
Other Items 0 0 0
Net Income 121,922 109,330 57,473
Preferred Stock & Other Adjustmnts 0 0 0
Net Income Avail To Common Shares 121,922 109,330 57,473
Quarterly Income Statements: All numbers in thousands)
Period Ending Jun30,2011 Mar31,2011 Dec31,2010 Sep30,2010
Total Revenue 436,255 430,494 419,763 423,718
Cost of Revenue 317,056 316,791 293,698 312,784
Gross Profit 119,199 113,703 126,065 110,934
Operating Expenses:
Research & Development 0 0 0 0
Selling, General & Adminis. 0 0 0 0
Non-Recurring Expenses 0 0 0 0
Other Operating Expenses 69,749 66,339 53,625 41,377
Total Operating Expenses 0 0 0 0
Operating Income or Loss 41,193 39,264 64,133 63,365
Income from Continuing Operations:
Total Other Income/Expenses Net 0 0 0 0
Earnings Before Int. & Taxes 49,450 47,364 72,440 69,557
Interest Expense 8,257 8,100 8,307 6,192
Income Before Taxes 41,193 39,264 64,133 63,365
Income Tax Expense 12,877 12,758 22,461 21,809
Minority Interest -5,016 0 0 0
Net Income from Continuing Op.s 28,316 26,506 41,672 41,556
Non-recurring Events:
Discontinued Operations 0 0 0 0
Extraordinary Items 0 0 0 0
Effect of Accounting Changes 0 0 0 0
Other Items 0 0 0 0
Net Income 23,300 26,506 41,672 41,556
Preferred Stock & Other Adj.s 0 0 0 0
Net Income Avail To Common Shs 23,300 26,506 41,672 41,556
Annual Balance Sheets: All Numbers in Thousands
Period Ending Dec31,2010 Dec31,2009 Dec31,2008
Current Assets:
Cash & Cash Equivalents 102,877 164,882 136,253
Short Term Investments 1,560 36,500 0
Net Receivables 766,107 617,399 640,946
Inventory 0 0 0
Other Current Assets 0 0 0
Total Current Assets 0 0 0
Long-Term Investments 2,496,490 1,880,569 573,302
Property, Plant & Equipt 0 0 39,038
Goodwill 250,103 244,690 18,962
Intangible Assets 123,820 53,350 20,464
Accumulated Amortization 0 0 0
Other Assets 230,405 103,153 5,349
Deferred Long Term Asset Charges 242,824 212,409 98,699
Total Assets 4,214,186 3,312,952 1,533,013
Current Liabilities:
Accounts Payable 35,037 89,080 197,885
Short/Current Long Term Debt 0 0 0
Other Current Liabilities 0 0 0
Total Current Liabilities 0 0 0
Long Term Debt 502,456 337,875 101,036
Other Liabilities 2,567,436 1,924,576 891,874
Deferred LT Liability Charges 25,169 0 7,014
Minority Interest 31,487 0 0
Negative Goodwill 0 0 0
Total Liabilities 3,126,548 2,262,451 1,197,809
Stockholder Equity:
Misc. Stocks Options Warrants 0 0 0
Redeemable Perferred Stock 0 0 0
Preferred Stock 0 0 0
Common Stock 457 451 234
Retained Earnings 367,013 265,613 165,400
Treasury Stock -91,779 -1,995 -1,026
Capital Surplus 763,064 751,878 208,094
Other Stockholder Equity 48,883 34,554 -37,498
Total Stockholder Equity 1,087,638 1,050,501 335,204
Net Tangible Assets 713,715 752,461 295,778
Quarterly Balance Sheets: All Numbers in Thousands
Period Ending Jun30,2011 Mar31,2011 Dec31,2010 Sep30,2010
Current Assets:
Cash & Cash Equivalents 60,412 71,048 102,877 118,436
Short Term Investments 4,998 0 1,560 26,902
Net Receivables 766,706 764,516 766,107 804,858
Inventory 0 0 0 0
Other Current Assets 0 0 0 0
Total Current Assets 0 0 0 0
Long-Term Investments 2,540,709 2,478,827 2,496,490 2,546,606
Property, Plant & Equipt 0 0 0 0
Goodwill 250,103 250,103 250,103 249,404
Intangible Assets 119,370 121,595 123,820 114,808
Accumulated Amortization 0 0 0 0
Other Assets 304,298 283,566 230,405 197,569
Deferred LT Asset Charges 167,496 160,863 242,824 230,775
Total Assets 4,214,092 4,130,518 4,214,186 4,289,358
Current Liabilities:
Accounts Payable 19,787 18,040 35,037 57,176
Current Portion LT Debt 0 0 0 0
Other Current Liabilities 0 0 0 0
Total Current Liabilities 0 0 0 0
Long Term Debt 496,895 509,651 502,456 509,171
Other Liabilities 2,597,511 2,549,102 2,567,436 2,649,437
Deferred LT Liab. Charges 15,871 4,132 25,169 3,795
Minority Interest 31,248 24,473 31,487 33,016
Negative Goodwill 0 0 0 0
Total Liabilities 3,141,525 3,087,358 3,126,548 3,195,419
Stockholder Equity:
Misc. Options, WarrantS 0 0 0 0
Redeemable Perferred Stock 0 0 0 0
Preferred Stock 0 0 0 0
Common Stock 464 464 457 456
Retained Earnings 361,327 344,945 367,013 333,628
Treasury Stock -113,409 -110,736 -91,779 -87,303
Capital Surplus 768,441 765,407 763,064 759,598
Other Stockholder Equity 55,744 43,080 48,883 87,560
Total Stockholder Equity 1,072,567 1,043,160 1,087,638 1,093,939
Net Tangible Assets 703,094 671,462 713,715 729,727
Annual Cash Flow: All Numbers in Thousands
Period Ending Dec31,2010 Dec31,2009 Dec31,2008
Net Income 121,922 26,506 57,473
Operating Activites:
Depreciation 33,434 25,052 15,265
Adjustments to Net Income 63,776 -3,139 9,978
Changes in Accounts Recv'bls 103,013 374,087 -158,063
Changes in Liabilities -167,066 -179,027 152,108
Changes in Inventories 0 0 0
Changes in Other Op'ing Actv's 0 -111,592 -15,027
Total Cash Flow fr Operations 170,023 214,711 61,734
Investing Activities:
Capital Expenditures -36,905 -26,299 -17,210
Investments -51,303 -375,646 18,837
Other Cash Flows fr Investing 0 226,729 0
Total Cash Flows fr Investing -260,115 -175,216 1,627
Financing Acitivies:
Dividends Paid -16,551 -10,740 -4,608
Sale or Purchase of Stock -84,394 -317 -354
Net Borrowings 130,334 0 0
Other Cash Flows fr Financing 0 191 175
Total Cash Flows fr Financing 28,087 -10,866 -4,787
Effect of Exchange Rate Change 0 0 0
Change in Cash & Cash Equiv.s -62,005 28,629 58,574
Quarterly Cash Flow: All Numbers in Thousands
Period Ending Jun30,2011 Mar31,2011 Dec31,2010 Sep30,2010
Net Income 23,300 26,506 41,672 41,556
Operating Activites:
Depreciation 11,781 9,529 15,542 2,401
Adjustments to Net Income 1,246 2,865 48,481 21,277
Changes in Accounts Recv'bls -345 31,701 35,031 23,558
Changes in Liabilities 37,257 -60,001 -69,831 -11,794
Changes in Inventories 0 0 0 0
Changes in Other Oper'g Acts 0 0 0 -4,759
Total Cash Flow f Operations 32,026 5,841 38,442 72,360
Investing Activities:
Capital Expenditures -2,230 -9,475 -8,102 -7,946
Investments -13,164 -21,174 -16,701 -178,089
Other Cash Flows fr Investing 0 0 -20,023 -151,884
Total Cash Flows fr Investing -15,394 -30,649 -44,826 -337,919
Financing Acitivies:
Dividends Paid -7,739 -5,116 -5,130 -5,295
Sale or Purchase of Stock -2,533 -18,754 -3,306 -33,004
Net Borrowings -17,000 17,000 0 74,334
Other Cash Flows fr Financing 4 -151 -739 -491
Total Cash Flows fr Financing -27,268 -7,021 -9,175 35,544
Effect of Exchange Rate Chg 0 0 0 0
Change in Cash & Cash Equiv. -10,636 -31,829 -15,559 -230,015
TWGP Tower Group Inc. [Indices near +3.0 or near zero,
or < zero bear special attention.]
P/E Ratio Tests:
Current P/E Ratio < 28? 3.0000 P/E Ratio > 5? 1.0000
P/E Ratio Vs Growth Rate: -0.6200 Forward P/E Ratio < 28? 3.0000
Sales Tests:
Price/Sales Ratio < 2.3? 3.0000 Inventory/Sales < 5%? 1.0000
Sales < $1 billion? 0.6855 Operating Margin < 7.5%? 0.5346
Balance Sheet Tests:
Debt/Equity < 0.40? 0.0117 Long-Term Debt Service: 2.1646
LTD Being Reduced? 1.2000 Short-Term Debt Service: 3.0000
Current Ratio > 2? 0.4250 Working Capital >= 1.5? 1.0000
Leverage Ratio < 20%? 1.4221 Debt / Assets < 1? 3.0000
Quick Ratio > 1? 1.0000 Inventory Turnover > 1? 1.0000
Shares Out Decreasing? 1.2000 Market Cap.> 1.5 Billion? 1.6092
Profit Margin > 7.5%? 1.0066
Income Tests:
Dividend Yield > 2.0%? 1.8182 EPS Annual Growth > 10%? 0.2700
Enterprise Value/Revenue: 0.4867 EPS 5-yr Growth > 20%? 2.0640
Enterprise Value/EBITDA: 0.6714 EPS Growth Consistent? 1.8000
EPS Qrtly Growth > 10%? -0.5900 Collection < 45 days? 0.2348
Rev. Qtrly Growth > 15%? 3.0000 Gross Pft/Cur. LTD < 1? 3.0000
EPS Annual Growth > 10%? 0.2700 Borrowing Int. Rate< 6%? 1.8252
Stock Performance Tests:
Volatility > 25%? 1.3138 % Held by Insiders < 5%? 0.4888
Beta > 1.25? 0.4080 % Held by Institut. < 50? 0.5112
50 Da MA > 200 Da MA? -0.0916 % Held by Institut. > 30? 3.0000
52-Wk Change vs. S&P 500: 0.3227 Short Ratio > 5? 3.0000
Price/Book Value < 3? 3.0000 Short % of Float > 20? 0.5400
Return on Assets > 17%? 0.2324 Average Volume > 100,000? 2.7088
Cash Flow Tests:
Oper. C.F. > Lever'd C.F: 0.6228 Positive Free Cash Flow? 1.0000
Positive Oper. Cash Flow? 1.0000 Price to C.F./sh. Ratio: 0.2789
Cash Flow / Assets >.10? 0.5664
TWGP Tower Group Inc. Overall Zenith Index: 1.2951
Financial Statements |
Financial Ratios |
. . . . . . . . . . . . 1 = Highest , 10 = Lowest
Market Grader |
Intrinsic Value (DCF) |
Intrinsic Value by Discounted Cash Flow Method:
Intrinsic Value (PEG) |
Intrinsic Value by Projected Earnings Growth Method:
Stock Scout |
We find "Scout" to be a bit biased toward the high end, so anything under a 6 is considered a negative, 6 and above, positive.
Projected Earnings |
Research Reports |
Analysts' Opinions |
Insider Activity |
Institutional Activity |
Institutional Orders to Buy or Sell:
Sentiment |
Zenith uses the "sentiment" score above or below 50 to award a positive or negative point in the Decision Matrix.
Short Interest Ratio |
As the short interest rises as a percentage of average daily share volume (Days to Cover), this is considered a measure of negative sentiment. Similarly, a decrease in that percentage is considered positive sentiment.
Stock Report |
Management's Discussion of Results of Operations Excerpts |
Moving Average Chart |
Right Time Study |
Channeling Potential |
The summary below includes a value for `Degree,' which refers on a
scale of 1 to 10 the range of a channel in the period under consi-
deration compared to the total range of price movement. It also looks
for the last closing price to be within the channel, otherwise zeroed.
The `Index' is the `Degree' weighted for volatility. Generally, the
the higher the index, the more suitable is the stock for trading as
a `rolling stock' between channel high and low points.
Results for Tower Group Inc.:
Symbol? TWGP
Total Months Available: 82
Months in Cycle? 4
Months Covered by Periods: 12
Period 1 Period 2 Period 3
H1 L1 H2 L2 H3 L3
26.86 20.86 27.86 22.21 24.45 20.00
RANGE = 27.86 TO 20.00 Close = 22.43
CHANNEL = 24.45 TO 22.21 Degree = 3
Volatility = 9.99% Index = 2
Intraday Chart |
20 Days:
Stock Fetcher |
Point & Figure Chart |
Wall Street Analyzer |
Marketspace Chart |
Time Series Forecast |
Neural Network Prediction |
"Neurostock" can only track long trades. Therefore its performance, as tracked by itself on stocks which are consistently falling, may not appear as good as it could if each "sell" signal were a "short sale."
Ultimate Trading Systems |
The corresponding trades for the above chart are shown in tabular form below.
Recommendation |
| Factors | Weighted Points |
|---|---|
| News | + 1 |
| Comparison | - 1 |
| Industry | 0 |
| Bond Issue | 0 |
| Zenith Index | + 1 |
| Non-GAAP vs. GAAP Earnings < 1% | - 1 |
| Cash Flow | - 1 |
| Ratios | + 1 |
| Market Grader | + 1 |
| Intrinsic Value DCF | + 1 |
| Intrinsic Value DDM | + 1 |
| Stock Scout | + 1 |
| Projected Earnings | + 1 |
| Research Reports | - 1 |
| Analysts | - 1 |
| Executive Perquisites | + 1 |
| Insider Activity | - 1 |
| Institutional Activity | - 1 |
| Management Reporting | + 1 |
| Short Interest | - 1 |
| Sentiment | - 1 |
| Standard & Poor's | + 1 |
| Moving Average | + 1 |
| Right Time Study | - 1 |
| Stock Fetcher | 0 |
| Point & Figure | - 1 |
| Wall Street Analyzer | - 1 |
| Marketspace Chart | + 1 |
| Time Series Chart | - 1 |
| Neural Network | + 1 |
| Stock Options | + 1 |
| Ultimate Trading Systems | + 1 |
| Total | + 3 |
Place 1,320 shares of Tower Group Inc. (TWGP) on the Active List.
