Blue Capital Reinsurance Holdings (NYSE: BCRH) and Validus Holdings (NYSE:VR) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their profitabiliy, dividends, risk, analyst recommendations, institutional ownership, valuation and earnings.

Institutional and Insider Ownership

40.6% of Blue Capital Reinsurance Holdings shares are held by institutional investors. Comparatively, 97.4% of Validus Holdings shares are held by institutional investors. 0.1% of Blue Capital Reinsurance Holdings shares are held by company insiders. Comparatively, 2.3% of Validus Holdings shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

Blue Capital Reinsurance Holdings pays an annual dividend of $1.20 per share and has a dividend yield of 6.2%. Validus Holdings pays an annual dividend of $1.52 per share and has a dividend yield of 2.9%. Blue Capital Reinsurance Holdings pays out 78.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Validus Holdings pays out 43.2% of its earnings in the form of a dividend. Blue Capital Reinsurance Holdings has raised its dividend for 2 consecutive years. Blue Capital Reinsurance Holdings is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Blue Capital Reinsurance Holdings and Validus Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Blue Capital Reinsurance Holdings 31.83% 7.44% 6.54%
Validus Holdings 11.88% 7.05% 2.38%

Valuation and Earnings

This table compares Blue Capital Reinsurance Holdings and Validus Holdings’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Blue Capital Reinsurance Holdings $42.10 million 4.06 $13.40 million $1.53 12.75
Validus Holdings $2.42 billion 1.71 $484.04 million $3.52 14.85

Validus Holdings has higher revenue and earnings than Blue Capital Reinsurance Holdings. Blue Capital Reinsurance Holdings is trading at a lower price-to-earnings ratio than Validus Holdings, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Blue Capital Reinsurance Holdings has a beta of 0.09, suggesting that its stock price is 91% less volatile than the S&P 500. Comparatively, Validus Holdings has a beta of 0.64, suggesting that its stock price is 36% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Blue Capital Reinsurance Holdings and Validus Holdings, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Blue Capital Reinsurance Holdings 0 2 0 0 2.00
Validus Holdings 0 3 1 0 2.25

Blue Capital Reinsurance Holdings currently has a consensus price target of $20.00, suggesting a potential upside of 2.56%. Validus Holdings has a consensus price target of $58.25, suggesting a potential upside of 11.44%. Given Validus Holdings’ stronger consensus rating and higher probable upside, analysts clearly believe Validus Holdings is more favorable than Blue Capital Reinsurance Holdings.

Summary

Validus Holdings beats Blue Capital Reinsurance Holdings on 11 of the 17 factors compared between the two stocks.

Blue Capital Reinsurance Holdings Company Profile

Blue Capital Reinsurance Holdings Ltd. provides collateralized reinsurance in the property catastrophe market and invests in various insurance-linked securities. The Company conducts its operations through its subsidiaries, including Blue Capital Re Ltd. (Blue Capital Re), which provides collateralized reinsurance, and Blue Capital Re ILS Ltd. (Blue Capital Re ILS), which conducts hedging and other investment activities. Blue Capital Re provides reinsurance to third-party insurance and reinsurance companies through reinsurance contracts, either directly with the cedant or on a fronted basis. Blue Capital Re ILS may purchase catastrophe bonds to access certain risks. Blue Capital Re or Blue Capital Re ILS may buy and sell industry loss warranties as a way to access certain risks. Blue Capital Re ILS’ portfolio may include over-the-counter or exchange-traded futures or options listed on catastrophe indexes, such as catastrophe or weather derivatives.

Validus Holdings Company Profile

Validus Holdings, Ltd. is a holding company. The Company operates through four segments: Validus Re, Talbot, Western World and AlphaCat. Validus Re is a Bermuda-based reinsurance segment focused treaty reinsurance. Validus Re concentrates on first-party property and other reinsurance risks. Talbot is a specialty insurance segment operating within the Lloyd’s insurance market through Syndicate 1183. The Talbot segment is focused on a range of marine and energy, political lines, commercial property, financial lines, contingency, accident and health and aviation classes of business. Western World is a specialty excess and surplus lines insurance segment operating within the United States commercial market. AlphaCat is a Bermuda-based investment advisor, managing capital from third parties and the Company in insurance linked securities and other investments in the property catastrophe reinsurance space.

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