Hallmark Financial Services (NASDAQ: HALL) and The Travelers Companies (NYSE:TRV) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, valuation, risk, institutional ownership, profitability and dividends.

Insider & Institutional Ownership

63.0% of Hallmark Financial Services shares are held by institutional investors. Comparatively, 77.5% of The Travelers Companies shares are held by institutional investors. 29.2% of Hallmark Financial Services shares are held by company insiders. Comparatively, 0.8% of The Travelers Companies shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Risk and Volatility

Hallmark Financial Services has a beta of 0.85, suggesting that its stock price is 15% less volatile than the S&P 500. Comparatively, The Travelers Companies has a beta of 1.22, suggesting that its stock price is 22% more volatile than the S&P 500.

Earnings and Valuation

This table compares Hallmark Financial Services and The Travelers Companies’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Hallmark Financial Services $385.30 million 0.49 $10.79 million $0.10 104.41
The Travelers Companies $28.15 billion 1.18 $4.86 billion $10.01 11.98

The Travelers Companies has higher revenue and earnings than Hallmark Financial Services. The Travelers Companies is trading at a lower price-to-earnings ratio than Hallmark Financial Services, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent recommendations for Hallmark Financial Services and The Travelers Companies, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hallmark Financial Services 0 0 0 0 N/A
The Travelers Companies 4 6 5 0 2.07

The Travelers Companies has a consensus price target of $124.03, suggesting a potential upside of 3.45%. Given The Travelers Companies’ higher possible upside, analysts plainly believe The Travelers Companies is more favorable than Hallmark Financial Services.

Dividends

The Travelers Companies pays an annual dividend of $2.88 per share and has a dividend yield of 2.4%. Hallmark Financial Services does not pay a dividend. The Travelers Companies pays out 28.8% of its earnings in the form of a dividend. Hallmark Financial Services has raised its dividend for 8 consecutive years.

Profitability

This table compares Hallmark Financial Services and The Travelers Companies’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hallmark Financial Services 0.52% 2.05% 0.47%
The Travelers Companies 10.15% 11.68% 2.73%

Summary

The Travelers Companies beats Hallmark Financial Services on 12 of the 16 factors compared between the two stocks.

About Hallmark Financial Services

Hallmark Financial Services, Inc. is an insurance holding company. The Company markets, distributes, underwrites and services its property/casualty insurance products to businesses and individuals. Its business involves marketing, distributing, underwriting and servicing insurance products, as well as providing other insurance related services. Its segments include Standard Commercial Segment, Specialty Commercial Segment and Personal Segment. The Company’s Standard Commercial P&C operating unit primarily underwrites low-severity, short-tailed commercial property/casualty insurance products in the standard market. The Company reinsures a portion of the risk it underwrites in order to control the exposure to losses and to protect capital resources. Its Workers Compensation operating unit specializes in small and middle market workers compensation business. Its Specialty Commercial operating unit offers general aviation and satellite launch insurance products and services.

About The Travelers Companies

The Travelers Companies, Inc. is a holding company. The Company’s segments include Business and International Insurance; Bond & Specialty Insurance, and Personal Insurance. Through its subsidiaries, it provides commercial and personal property and casualty insurance products and services. The Business and International Insurance segment offers property and casualty insurance and insurance related services to its clients, in the United States and in Canada, as well as in the United Kingdom, the Republic of Ireland, Brazil and throughout other parts of the world. The Bond & Specialty Insurance segment provides surety, fidelity, management liability, professional liability, and other property and casualty coverages and related risk management services to a range of primarily domestic customers, utilizing various degrees of financially-based underwriting approaches. The Personal Insurance segment writes a range of property and casualty insurance covering individuals’ personal risks.

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