Comparing Validus (VR) and State Auto Financial (STFC)
State Auto Financial (NASDAQ:STFC) and Validus (NYSE:VR) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their risk, dividends, analyst recommendations, institutional ownership, valuation, earnings and profitability.
This table compares State Auto Financial and Validus’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|State Auto Financial||1.00%||6.09%||1.77%|
This is a summary of current recommendations for State Auto Financial and Validus, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|State Auto Financial||0||1||0||0||2.00|
State Auto Financial presently has a consensus price target of $30.00, indicating a potential downside of 9.37%. Given State Auto Financial’s higher possible upside, analysts clearly believe State Auto Financial is more favorable than Validus.
Valuation & Earnings
This table compares State Auto Financial and Validus’ revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|State Auto Financial||$1.28 billion||1.12||$12.80 million||$1.20||27.58|
State Auto Financial has higher revenue and earnings than Validus.
Insider & Institutional Ownership
34.6% of State Auto Financial shares are owned by institutional investors. Comparatively, 82.0% of Validus shares are owned by institutional investors. 2.0% of State Auto Financial shares are owned by insiders. Comparatively, 2.3% of Validus shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
State Auto Financial pays an annual dividend of $0.40 per share and has a dividend yield of 1.2%. Validus pays an annual dividend of $1.52 per share and has a dividend yield of 2.2%. State Auto Financial pays out 33.3% of its earnings in the form of a dividend. Validus has increased its dividend for 4 consecutive years. Validus is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
State Auto Financial Company Profile
State Auto Financial Corporation, through its subsidiaries, engages in writing personal, business, and specialty insurance products. It operates through four segments: Personal Insurance, Commercial Insurance, Specialty Insurance, and Investment Operations. The Personal Insurance segment primarily provides personal automobile, homeowners insurance, and other personal insurance products. The commercial insurance segment primarily provides commercial automobile, commercial multi-peril, fire and allied, general liability, and workers' compensation insurance covering small-to-medium sized commercial insurance market, as well as farm and ranch insurance. The Specialty Insurance segment provides commercial coverages that require specialized product underwriting, claims handling, or risk management services. This segment markets and underwrites specialized property exposures with a focus on catastrophe exposed risks covering property, and general liability; markets and underwrites commercial auto, healthcare, umbrella, property, and general liability coverages; and markets and distributes homogenous risks covering commercial auto, general liability, and property. The Investment Operations segment provides investment management services to affiliated insurance companies. The company markets its products primarily through independent agencies, including retail agencies and wholesale brokers. The company was founded in 1950 and is headquartered in Columbus, Ohio. State Auto Financial Corporation is a subsidiary of State Automobile Mutual Insurance Company.
Validus Company Profile
Validus Holdings, Ltd. provides reinsurance coverage, insurance coverage, and insurance linked securities management services worldwide. It operates through three segments: Reinsurance, Insurance, and Asset Management. The Reinsurance segment underwrites property reinsurance products on a catastrophe excess of loss, per risk excess of loss and proportional basis; and aerospace and aviation, agriculture, composite, marine, technical lines, terrorism, trade credit, workers' compensation, and other specialty lines, as well as casualty and financial lines. The Insurance segment underwrites property, accident and health, agriculture, aviation, contingency, marine, and political lines insurance products; bankers blanket bond, commercial crime, computer crime, cyber- crime, professional indemnity, and directors' and officers' insurance products for various financial institutions and other companies; and commercial and institutional risks comprising general, professional, and product liability, as well as miscellaneous malpractice insurance products. This segment also underwrites marine and energy liability, and political risk insurance products, as well as insurance products for repair, maintenance, and upkeep of aircrafts and premises for small companies. The Asset Management segment manages capital for third parties through insurance-linked securities, and other property catastrophe and specialty reinsurance investments. Validus Holdings, Ltd. was founded in 2005 and is based in Pembroke, Bermuda.
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