ACE Limited (NYSE:ACE)

CAPS Rating: 4 out of 5

The Company and its direct and indirect subsidiaries are a global property and casualty insurance and reinsurance organization, servicing the insurance needs of commercial and individual customers in more than 140 countries and jurisdictions.

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Member Avatar mrbill6 (55.33) Submitted: 2/3/2014 11:58:12 AM : Outperform Start Price: $91.93 ACE Score: +3.16

SuperStockScreener Strong Buy

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Member Avatar DrydenTexas (91.96) Submitted: 1/21/2014 10:44:18 AM : Outperform Start Price: $95.73 ACE Score: +3.75

gblc

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Member Avatar amwhite6 (46.12) Submitted: 9/17/2013 3:24:22 PM : Outperform Start Price: $90.89 ACE Score: +2.07

Changing My Caps to Reflect my investing strategy. I start with a simple screener trying to find undervalued dividend paying stocks. Then because I want to invest in things I understand I eliminate any businesses I have not heard of or in areas I lack knowledge ( Financials, Precious Metals). After that I check the Caps Rating and it gets a thumbs up if it is rated 4 stars or higher. Very few 3 star companies will get a thumbs up but occasionally i will go out on a limb with one.

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Member Avatar JorgeAura (< 20) Submitted: 2/2/2013 5:45:32 PM : Underperform Start Price: $82.52 ACE Score: +1.67

sp500 in maximums.

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Member Avatar XMFGuruEbby (92.71) Submitted: 8/21/2012 3:12:08 PM : Outperform Start Price: $70.67 ACE Score: +12.09

ACE Ltd. has some room to grow based on its Graham number. Read my full write-up here: http://bit.ly/NeU8Qn

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Member Avatar Tony007x (< 20) Submitted: 9/24/2011 3:20:58 AM : Outperform Start Price: $56.49 ACE Score: +16.07

High dividen yield, good annual return

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Member Avatar BCfunddude (95.25) Submitted: 5/24/2011 4:32:06 PM : Outperform Start Price: $63.10 ACE Score: +18.91

An investor has purchased of 2,500 November 70 calls for an average premium of $2.96 and the sale of an equal number of November 62.50 puts for $2.18. This guy is in for a rude awakening if shares tumble between now and expiration of his options...but I'm willing to follow his hunch.

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Member Avatar truthisntstupid (94.09) Submitted: 12/18/2010 10:19:23 PM : Outperform Start Price: $56.89 ACE Score: +27.87

I was looking for the ticker for Ace Hardware and this popped up.
CAPS description says, "...global property casualty insurance and reinsurance organization, servicing the insurance needs of commercial and individual customers in more than 140 countries and jurisdictions."
So I thought I'd look at what Morningstar had to say about it.
"Morningstar's Take", from Morningstar.com:
"ACE was originally established by a group of Fortune 500 companies seeking to transfer excess insurance risks that the market often avoided. This business model is still present today, as ACE assumes some of the biggest risks for large corporate customers. Over time, it has built a truly global footprint to better serve these valued accounts. We think its international network endows ACE with a narrow economic moat."
That's from Morningstar.com - the "moat" people.
So I thought it deserved a closer look.
Oh, no! Today's price is only 5% or so off the 5-year high - which also, by the way, is the 10-year high!
This can't be good.
But when I look at a company's stock, I look at the company first. Not just the price. Never judge a book by its cover.
I'm a dividend guy. But before we consider the dividend growth potential of this company, we need to look at all the reasons why I think this company may be in the very early stages of becoming what may be a dividend juggernaut in years to come.
First, the price. Forget about the price in dollars right now. Prices of shares aren't measured in dollars.
The current P/E is 6.8.
The 5-year average P/E is 10.9.
The 5-year high P/E is 19.3.
The 5-year high P/E was set in Sep of 2008, when the stock reached a 5-and-10-year high of $68. If you divide $68 by the earnings that year of $3.53, you get 19.26 as the 5-year high P/E - it's rounded to 19.3 on our CAPS "ratios" page.
At Morningstar.com, I see that the consensus opinion of 20 analysts rates it a pretty strong buy, giving it a rating of 1.2, with a rating of 2 being a hold, and a rating of 1 being a strong buy.
This in spite of its current price and the fact that it's only 5% or so off a 10-year high?
What are they seeing?
Maybe this:
It has a PEG of 0.7.
How about return on equity? Better yet, how about breaking return on equity down into its 3 separate components?
Return on equity is FINANCIAL LEVERAGE X ASSET TURNOVER X NET MARGIN. The last two multiplied together, asset turnover X net margin, are what we are talking about when we are looking at RETURN ON ASSETS. RETURN ON ASSETS is pretty much what return on equity would be in the absence of financial leverage,
Let's break it down:
FINANCIAL LEVERAGE
Assets/Equity = 3.61. It sounds pretty high to me, but maybe companies in this industry tend to carry more leverage. One thing I can see, looking at this number for ACE over the last 10 years: this number is not only considerably lower than its average over that time, but is at a 10-year low. Typically a decrease in this number would result in a decrease in return on equity.
But its trailing 12 months' return on equity beats the return on equity 6 out of the last 10 years when financial leverage was considerably higher.
ASSET TURNOVER
Revenue/Assets = $0.20. This is the amount of revenue generated for each dollar of assets. This figure is pretty average for ACE over the last 10 years, and many years were actually 2 or 3 cents higher.
That leaves only 1 factor remaining to explain why RETURN ON ASSETS is at a 10-year high of 3.82 - considerably higher than its past average. And that would have to be
NET MARGIN
Net Income/Revenues = 19.28%. Net margin represents the % of revenues that are profit. This is also a 10-year high. Only 1 year out of the last 10 came within a percentage point of this. 1 other year out of the last 10 came within 2 percentage points of this. Most of the last 10 year the net margin was nowhere close to what it is now.
So what we're seeing here is that despite considerable deleveraging, return on assets and net margin are at 10-year highs, driving return on equity higher than 7 out of the last 10 years.
DEBT/EQUITY, at 0.15, has only been lower 2 out of the last 10 years.
TOTAL LIABILITIES are at a 10-year low.
Interest coverage is 17.9.
SHARES OUTSTANDING are down to340M from 403M in 2002.
REVENUE was $ 5.267B in 2000.
REVENUE was $15.075B in 2009.
REVENUE was $15.869B in the trailing 12 months.
Just look what I accidentally found while looking for Ace Hardware! I think I like it!
Now, about those dividends....
The current dividend yield is 2.1%, and the 5-year average dividend yield is 1.8%.
The payout ratio is, according to CAPS and Morningstar.com, 7%.
Yeah. Seven percent.
Our CAPS "ratios" page shows a negative 13.15% 5-year dividend growth rate.
I've looked at its dividend payment history at Morningstar.com and at dividendinvestor.com, and I'm not seeing that.
This dividend is one that grows. They started paying dividends in Oct 2008 at $0.26.
In Jan 2009 they raised it to $0.27.
They lowered the Apr 2009 quarterly dividend payment from $0.27 back down to $0.26 - one penny - and in Aug 2009 they raised it back up again, this time to $0.31.
This Aug they raised it again - to $0.33.
According to dividendinvestor.com, they've been paying dividends since 2008.
Considering their growth, their excellent financial condition, the fact that their dividend yield is 2.1% at a payout ratio of 7% - what might a person's yield on cost be in 5 or 10 years? This might be a chance to get in early enough to be a shareholder in a company that does THIS:
http://caps.fool.com/Blogs/dividend-growth-time-and/346141

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Member Avatar mrcarlen (< 20) Submitted: 11/16/2010 3:10:05 PM : Outperform Start Price: $54.12 ACE Score: +28.15

High productivity

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Member Avatar SorosTracking (35.90) Submitted: 2/22/2010 7:39:21 AM : Outperform Start Price: $45.48 ACE Score: +54.83

1,496,150 owned
- Q409 13F - Soros Fund Management LLC

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Member Avatar XMFCams (< 20) Submitted: 1/6/2010 5:37:49 PM : Underperform Start Price: $43.12 ACE Score: -69.90

slow mover

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Member Avatar LngTrmVw (72.62) Submitted: 5/4/2009 12:04:22 AM : Outperform Start Price: $41.05 ACE Score: +33.20

the change in earnings over each of the last four quarters and the current quarter estimate shows strong acceleration in the quarterly growth rates, which should lead to a improvement in earnings growth.

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Member Avatar Afropuffashion (< 20) Submitted: 3/5/2009 12:37:45 PM : Underperform Start Price: $28.36 ACE Score: -82.89

Property insurance will suffer as home values decrease

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Member Avatar 2FOOLME2 (25.75) Submitted: 12/9/2008 10:51:05 AM : Underperform Start Price: $43.19 ACE Score: -25.71

In trouble nationwide

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Member Avatar wbcookiii (< 20) Submitted: 10/12/2008 9:42:29 PM : Outperform Start Price: $36.92 ACE Score: +71.02

Well secured, minimal life insurance, conservative investment strategy, global revenue source.

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Member Avatar phgga (< 20) Submitted: 5/31/2008 9:38:28 AM : Outperform Start Price: $51.78 ACE Score: +56.71

not beat down as rest of sector and great p/e

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Member Avatar davixita (64.78) Submitted: 5/22/2008 10:18:45 AM : Outperform Start Price: $51.33 ACE Score: +58.26

At this price it is a bargain!!! Low p/e and a ver very low payout will gave you satisfaction!!!!!!!!!

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Member Avatar Colli002 (73.81) Submitted: 4/22/2008 8:28:41 AM : Outperform Start Price: $50.35 ACE Score: +60.58

This is a pure intrinsic value pick..

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Member Avatar johnreger (64.07) Submitted: 4/8/2008 1:16:48 PM : Outperform Start Price: $49.08 ACE Score: +64.04

Company expansion, more markets more products

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Member Avatar bjiggs (< 20) Submitted: 9/5/2007 10:31:57 PM : Outperform Start Price: $48.96 ACE Score: +73.55

Beaten down due to sub-prime fiasco but this company has limited exposure. One of the stronger players in an otherwise weak sector.

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