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Fairfax Financial Holdings (TSE:FFH)
TSX:FFH
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Fairfax Financial Holdings
(TSX:FFH)
71Outperform
Fairfax Financial Holdings (FFH) vs. S&P 500 (SPY)
Market Cap
$47.97B
Dividend Yield1.08%
Average Volume (3M)59.23K
Price to Earnings (P/E)8.6
Beta (1Y)0.55
Revenue Growth20.32%
EPS Growth-16.64%
CountryCA
Employees40,000
SectorFinancial
Sector Strength81
IndustryInsurance
Share Statistics
EPS (TTM)238.35
Shares Outstanding20,801,178
10 Day Avg. Volume66,587
30 Day Avg. Volume59,229
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.92
Price to Cash Flow (P/CF)5.30
P/FCF Ratio3.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$2,289.18Price Target Upside16.54% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
Fairfax Financial Holdings Business Overview & Revenue Model
Company DescriptionFairfax Financial Holdings Limited is a Canadian holding company engaged in property and casualty insurance, reinsurance, and investment management. Headquartered in Toronto, Ontario, the company operates through a network of subsidiaries, providing a comprehensive range of insurance products and services across various sectors. Fairfax is known for its disciplined underwriting approach and value-oriented investment philosophy, focusing on long-term growth and stability.
How the Company Makes MoneyFairfax Financial Holdings generates revenue primarily through its insurance and reinsurance operations, along with investment income. The company's insurance subsidiaries underwrite property and casualty risks, collecting premiums from policyholders. These premiums constitute a significant portion of Fairfax's revenue. The reinsurance segment involves assuming risk from other insurance companies in exchange for premiums, further diversifying revenue streams. Investment income is another critical revenue source, as Fairfax invests in a diversified portfolio of equities, fixed-income securities, and alternative investments. The company's investment strategy, led by seasoned professionals, aims to achieve superior returns while managing risk. Strategic acquisitions and partnerships in the insurance and investment sectors also contribute to Fairfax's earnings, allowing for expansion and increased market presence.
Fairfax Financial Holdings Financial Statement Overview
Summary
Fairfax Financial Holdings showcases robust profitability and effective leverage management within the insurance industry. Despite strong current metrics in profitability and cash flow, the historical volatility in revenue and cash flow suggests a need for cautious management.Income Statement
Fairfax Financial Holdings demonstrates strong profitability with a TTM net profit margin of 13.89% and a gross profit margin exceeding revenue, indicating operational efficiency. The revenue growth rate is volatile, and the net income has fluctuated significantly over the years. Recent EBIT and EBITDA margins suggest effective cost management, though past periods show instability.75
Positive
Balance Sheet
The company's balance sheet reveals a moderate debt-to-equity ratio of 0.45, indicating reasonable leverage within the insurance industry. The equity ratio stands at 24.9%, reflecting a solid equity base. However, fluctuations in stockholders' equity and total debt levels highlight potential volatility in financial stability.70
Positive
Cash Flow
Cash flow analysis shows significant improvement in free cash flow, with a free cash flow growth rate of 788.95% TTM. The operating cash flow to net income ratio of 1.05 indicates effective cash conversion, but historical volatility and past negative cash flows suggest potential liquidity challenges.65
Positive
| Breakdown | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 29.16B | 31.83B | 25.82B | 25.80B | 19.79B | 21.18B | Gross Profit |
| 30.71B | 25.80B | 25.82B | 25.80B | 19.79B | 21.18B | EBIT |
| 3.97B | 31.40B | 1.34B | -1.03B | -4.29B | -3.27B | EBITDA |
| 2.93B | 6.09B | 2.03B | -100.50M | 1.47B | 3.32B | Net Income Common Stockholders |
| 4.05B | 4.38B | 1.15B | 3.40B | 37.40M | 2.00B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 7.31B | 7.96B | 11.70B | 25.34B | 16.30B | 10.63B | Total Assets |
| 64.37B | 91.99B | 92.13B | 86.65B | 74.05B | 70.51B | Total Debt |
| 6.48B | 10.80B | 9.32B | 7.75B | 8.81B | 8.73B | Net Debt |
| 1.37B | 5.04B | -2.38B | -17.59B | -7.49B | 4.40B | Total Liabilities |
| 47.01B | 64.28B | 71.79B | 65.33B | 56.53B | 52.60B | Stockholders Equity |
| 13.11B | 22.95B | 16.68B | 16.39B | 13.86B | 14.38B |
| Cash Flow | Free Cash Flow | ||||
| 3.81B | -553.50M | -4.84B | 6.29B | -133.50M | 1.04B | Operating Cash Flow |
| 4.25B | -39.40M | -4.42B | 6.64B | 139.80M | 1.36B | Investing Cash Flow |
| -781.60M | 92.00M | 384.80M | 1.84B | -46.80M | -1.20B | Financing Cash Flow |
| -1.35B | -1.07B | -1.29B | -1.19B | 436.90M | -837.40M |
Fairfax Financial Holdings Technical Analysis
Neutral
1964.37
Price Trends
2000.24
Negative
1940.43
Positive
1758.16
Positive
Market Momentum
7.90
Positive
40.95
Neutral
29.27
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:FFH, the sentiment is Neutral. The current price of 1964.37 is below the 20-day moving average (MA) of 2037.77, below the 50-day MA of 2000.24, and above the 200-day MA of 1758.16, indicating a neutral trend. The MACD of 7.90 indicates Positive momentum. The RSI at 40.95 is Neutral, neither overbought nor oversold. The STOCH value of 29.27 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSE:FFH.
Fairfax Financial Holdings Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | C$51.79B | 23.46 | 13.38% | 1.67% | 5.02% | 77.36% | |
75 Outperform | $71.01B | 14.75 | 11.03% | 3.99% | 7.64% | 9.22% | |
72 Outperform | $44.95B | 15.17 | 12.87% | 4.37% | -12.72% | -0.16% | |
71 Outperform | $47.97B | 8.61 | 16.48% | 1.08% | 20.32% | -16.64% | |
71 Outperform | C$31.36B | 15.03 | 10.36% | 4.48% | 30.81% | -2.47% | |
69 Neutral | C$49.41B | 12.68 | 15.52% | 4.19% | -2.40% | 42.24% | |
64 Neutral | $13.88B | 10.79 | 9.29% | 4.15% | 17.66% | -7.41% |
* Financial Sector Average
Performance Comparison
TSE:FFH
Fairfax Financial Holdings
1,964.37
489.38
33.18%
TSE:SLF
Sun Life Financial
78.47
7.64
10.78%
TSE:MFC
Manulife Financial
41.21
10.28
33.22%
TSE:GWO
Great-West Lifeco
51.12
10.62
26.22%
TSE:IFC
Intact Financial Corporation
283.60
58.81
26.16%
TSE:POW
Power Corp of Canada
48.16
11.23
30.41%
Fairfax Financial Holdings Earnings Call Summary
Earnings Call Date: Feb 13, 2025 | % Change Since: -1.78% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Positive
The earnings call presented a strong financial performance with record earnings and underwriting income, alongside significant growth in premiums and book value per share. However, the company faced challenges from currency fluctuations, unrealized bond losses due to rising interest rates, and significant catastrophe losses from wildfires.Highlights
Record Underwriting Income and Earnings
Fairfax earned $3.9 billion after taxes with record underwriting income of $1.8 billion and record interest and dividend income of $2.5 billion.
Significant Growth in Book Value Per Share
Book value per share increased by 14.5%, adjusted for a $15 dividend, to $1,060.
Strong Premium Growth
Insurance and reinsurance operations wrote $32.5 billion of gross premium in 2024, an all-time high, up 12.6% versus 2023.
Favorable Reserve Development
For the 18th consecutive year, the company recorded favorable reserve development of $594 million, providing a benefit of 2.4 points on the combined ratio.
Investment Performance
Fairfax's investment return for 2024 was 6.7%, driven by increased interest and dividend income, strong share of profits of associates, and net gains on equities.
Lowlights
Currency Losses Impact
A loss of $477 million in other comprehensive income due to currency losses was reported, primarily from the strengthening of the U.S. dollar.
Unrealized Bond Losses
Unrealized losses on the bond portfolio totaled $731 million, driven by rising interest rates.
Catastrophe Losses
Fourth quarter catastrophe losses were significant, with fires in Southern California resulting in estimated net losses of $500 million to $750 million.
Company Guidance
During the 2024 year-end results call, Fairfax reported impressive financial metrics, including a $3.9 billion net income after taxes, record underwriting income of $1.8 billion, and interest and dividend income of $2.5 billion. The company's book value per share rose by 14.5% to $1,060, adjusted for a $15 dividend. The insurance and reinsurance operations wrote $32.5 billion in gross premiums, marking a 12.6% increase from 2023. Fairfax's combined ratio for the year was 92.7%, with an underwriting profit of $1.8 billion, despite $1.1 billion in catastrophe losses. The investment portfolio yielded a return of 6.7%, despite $731 million in unrealized bond losses due to rising interest rates. The company also highlighted significant acquisitions, including Sleep Country Canada and Peak Achievement, and noted a strong position for future growth in international markets.Fairfax Financial Holdings Corporate Events
Fairfax Financial Pledges $1 Million for California Wildfire Relief
Jan 15, 2025
Fairfax Financial Holdings Limited has announced a donation of US$1 million to the American Red Cross to aid the relief efforts for the recent wildfires in Southern California. This contribution underscores Fairfax’s commitment to supporting communities in distress, reflecting its broader corporate responsibility ethos and potentially enhancing its stakeholder relations by demonstrating solidarity with affected residents.
Fairfax Financial Declares Quarterly Preferred Dividends
Dec 2, 2024
Fairfax Financial Holdings has announced its quarterly dividends for various series of preferred shares, with payments scheduled for late December 2024. The company also disclosed dividend rates for certain floating rate preferred shares for the upcoming period. Fairfax operates mainly in property and casualty insurance, reinsurance, and investment management.
Fairfax Financial’s C$700 Million Notes Offering
Nov 20, 2024
Fairfax Financial Holdings has announced a C$700 million offering of senior notes, consisting of C$450 million due in 2034 and C$250 million due in 2054, intended to help redeem certain preferred shares and support general corporate purposes. The notes are priced close to their principal amounts and will offer fixed interest rates of 4.73% and 5.23%, respectively. The offering is expected to close around November 22, 2024, subject to usual conditions.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.