Horace Mann Educators trades at $50.71 per share and has stayed right on track with the overall market, gaining 9% over the last six months. At the same time, the S&P 500 has returned 6.2%.

Is now the time to buy Horace Mann Educators, or should you be careful about including it in your portfolio? Get the full stock story straight from our expert analysts, it’s free.

Why Do We Think Horace Mann Educators Will Underperform?

We don’t have much confidence in Horace Mann Educators. Here are three reasons we avoid HMN, plus one stock we’d rather own.

1. Net Premiums Earned Point to Soft Demand

Insurers sell policies then use reinsurance (insurance for insurance companies) to protect themselves from large losses. Net premiums earned are therefore what's collected from selling policies less what’s paid to reinsurers as a risk mitigation tool.

Horace Mann Educators’s net premiums earned has grown at a 6.2% annualized rate over the last five years, slightly worse than the broader insurance industry and in line with its total revenue.

2. Substandard BVPS Growth Indicates Limited Asset Expansion

In the insurance industry, book value per share (BVPS) provides a clear picture of shareholder value, as it represents the total equity backing a company’s insurance operations and growth initiatives.

To the detriment of investors, Horace Mann Educators’s BVPS grew at a mediocre 11% annual clip over the last two years.

3. Previous Growth Initiatives Haven’t Impressed

Return on equity (ROE) serves as a comprehensive measure of an insurer’s performance, showing how efficiently it converts shareholder capital into profits. Strong ROE performance typically translates to better returns for investors through a combination of earnings retention, share repurchases, and dividend distributions.

Over the last five years, Horace Mann Educators has averaged an ROE of 6.8%, uninspiring for a company operating in a sector where the average shakes out around 12.5%.

Final Judgment

Horace Mann Educators doesn’t pass our quality test. That said, the stock currently trades at 1.3× forward P/B (or $50.71 per share). This multiple tells us a lot of good news is priced in - we think other companies feature superior fundamentals at the moment. We’d recommend looking at the most entrenched endpoint security platform on the market.

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