American Coastal Insurance (NASDAQ:ACIC) versus The Hanover Insurance Group (NYSE:THG) Critical Analysis

The Hanover Insurance Group (NYSE:THG) and American Coastal Insurance (NASDAQ:ACIC) are both finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, earnings, dividends, institutional ownership, valuation, risk and profitability.

Dividends

The Hanover Insurance Group pays an annual dividend of $3.80 per share and has a dividend yield of 2.2%. American Coastal Insurance pays an annual dividend of $0.50 per share and has a dividend yield of 4.5%. The Hanover Insurance Group pays out 22.0% of its earnings in the form of a dividend. American Coastal Insurance pays out 29.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. The Hanover Insurance Group has raised its dividend for 20 consecutive years.

Institutional & Insider Ownership

86.6% of The Hanover Insurance Group shares are owned by institutional investors. Comparatively, 22.1% of American Coastal Insurance shares are owned by institutional investors. 2.5% of The Hanover Insurance Group shares are owned by insiders. Comparatively, 49.9% of American Coastal Insurance shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares The Hanover Insurance Group and American Coastal Insurance’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
The Hanover Insurance Group	9.71%	21.73%	4.30%
American Coastal Insurance	25.95%	30.06%	6.84%

Valuation and Earnings

This table compares The Hanover Insurance Group and American Coastal Insurance”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
The Hanover Insurance Group	$6.24 billion	0.98	$426.00 million	$17.29	9.94
American Coastal Insurance	$327.88 million	1.66	$75.72 million	$1.71	6.53

The Hanover Insurance Group has higher revenue and earnings than American Coastal Insurance. American Coastal Insurance is trading at a lower price-to-earnings ratio than The Hanover Insurance Group, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for The Hanover Insurance Group and American Coastal Insurance, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
The Hanover Insurance Group	0	3	5	0	2.63
American Coastal Insurance	0	1	1	0	2.50

The Hanover Insurance Group currently has a consensus target price of $199.00, indicating a potential upside of 15.80%. Given The Hanover Insurance Group’s stronger consensus rating and higher probable upside, equities analysts clearly believe The Hanover Insurance Group is more favorable than American Coastal Insurance.

Risk and Volatility

The Hanover Insurance Group has a beta of 0.33, suggesting that its share price is 67% less volatile than the S&P 500. Comparatively, American Coastal Insurance has a beta of -0.55, suggesting that its share price is 155% less volatile than the S&P 500.

Summary

The Hanover Insurance Group beats American Coastal Insurance on 11 of the 17 factors compared between the two stocks.

About The Hanover Insurance Group

The Hanover Insurance Group, Inc., through its subsidiaries, provides various property and casualty insurance products and services in the United States. The company operates through four segments: Core Commercial, Specialty, Personal Lines, and Other. The Commercial Lines segment offers commercial multiple peril, commercial automobile, workers' compensation, and other commercial lines coverage. The Specialty segment provides professional and executive Lines, marine, and surety and other, as well as specialty property and casualty, such as program business, specialty industrial business, excess and surplus business, and specialty general liability coverage. The Personal Lines segment offers personal automobile and homeowner's coverages, as well as other personal coverages, such as personal umbrella, inland marine, fire, personal watercraft, personal cyber, and other miscellaneous coverages. The Other segment markets investment advisory services to institutions, insurance companies, pension funds, and other organizations. The Hanover Insurance Group, Inc. markets its products and services through independent agents and brokers. The company was formerly known as Allmerica Financial Corp. and changed its name to The Hanover Insurance Group, Inc. in December 2005. The Hanover Insurance Group, Inc. was founded in 1852 and is headquartered in Worcester, Massachusetts.

About American Coastal Insurance

American Coastal Insurance Corporation operates as a property and casualty insurance holding company that sources, writes, and services residential personal and commercial property, and casualty insurance policies in the United States. The company offers structure, content, and liability coverage for standard single-family homeowners, renters, and condominium unit owners. It also provides commercial multi-peril property insurance for residential condominium associations and apartments, as well as loss or damage to buildings, inventory, and equipment caused by fire, wind, hail, water, theft, and vandalism. In addition, the company offers equipment breakdown, identity theft, cyber security, and flood policies. The company markets and distributes its products through a network of independent agencies. The company was formerly known as United Insurance Holdings Corp. and changed its name to American Coastal Insurance Corporation in August 2023. American Coastal Insurance Corporation was founded in 1999 and is headquartered in Saint Petersburg, Florida.