Heritage Insurance (NYSE: HRTG) and Erie Indemnity (NASDAQ:ERIE) are both financials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, institutional ownership, dividends, profitability, earnings and risk.

Dividends

Heritage Insurance pays an annual dividend of $0.24 per share and has a dividend yield of 1.4%. Erie Indemnity pays an annual dividend of $3.13 per share and has a dividend yield of 2.7%. Heritage Insurance pays out 2,400.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Erie Indemnity pays out 77.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Heritage Insurance has raised its dividend for 21 consecutive years. Erie Indemnity is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

Heritage Insurance has a beta of 1.49, suggesting that its share price is 49% more volatile than the S&P 500. Comparatively, Erie Indemnity has a beta of 0.47, suggesting that its share price is 53% less volatile than the S&P 500.

Institutional and Insider Ownership

81.3% of Heritage Insurance shares are owned by institutional investors. Comparatively, 30.9% of Erie Indemnity shares are owned by institutional investors. 16.1% of Heritage Insurance shares are owned by company insiders. Comparatively, 46.8% of Erie Indemnity shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares Heritage Insurance and Erie Indemnity’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Heritage Insurance 0.27% 0.31% 0.09%
Erie Indemnity 12.62% 24.98% 13.51%

Valuation & Earnings

This table compares Heritage Insurance and Erie Indemnity’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Heritage Insurance $438.96 million 0.97 $33.86 million $0.01 1,751.00
Erie Indemnity $1.60 billion 3.42 $210.36 million $4.02 29.38

Erie Indemnity has higher revenue and earnings than Heritage Insurance. Erie Indemnity is trading at a lower price-to-earnings ratio than Heritage Insurance, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Heritage Insurance and Erie Indemnity, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Heritage Insurance 0 0 3 0 3.00
Erie Indemnity 0 0 0 0 N/A

Heritage Insurance currently has a consensus target price of $18.00, indicating a potential upside of 2.80%. Given Heritage Insurance’s higher possible upside, equities analysts plainly believe Heritage Insurance is more favorable than Erie Indemnity.

Summary

Erie Indemnity beats Heritage Insurance on 10 of the 16 factors compared between the two stocks.

Heritage Insurance Company Profile

Heritage Insurance Holdings, Inc. (Heritage Insurance) is a property and casualty insurance holding company. The Company provides personal and commercial residential insurance. Through its subsidiary, Heritage Property & Casualty Insurance Company (Heritage P&C), it provides personal residential insurance for single-family homeowners and condominium owners, rental property insurance and commercial residential insurance in the state of Florida and North Carolina. The Company is vertically integrated and controls or manages all aspects of insurance underwriting, customer service, actuarial analysis, distribution and claims processing and adjusting. The Company’s primary products are personal and commercial residential insurance, which it offers only in Florida. As of December 31, 2016, it marketed and wrote personal lines voluntary policies through a network of approximately 1,900 independent agents. It had 150,998 voluntary personal residential policies as of December 31, 2016.

Erie Indemnity Company Profile

Erie Indemnity Company is a management company. The Company serves as the attorney-in-fact for the subscribers (policyholders) at the Erie Insurance Exchange (Exchange). The Exchange is a reciprocal insurer that writes property and casualty insurance. The Company’s function is to perform certain services for the Exchange relating to the sales, underwriting and issuance of policies on behalf of the Exchange. The sales related services the Company provides include agent compensation, and certain sales and advertising support services. Agent compensation includes scheduled commissions to agents based upon premiums written, as well as additional commissions and bonuses to agents. The underwriting services the Company provides include underwriting and policy processing expenses. It provides information technology services that supports various functions. The remaining services the Company provides include customer service and administrative costs.

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