National Interstate (NASDAQ: NATL) and ProAssurance (NYSE:PRA) are both financials companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, risk, profitability, valuation, dividends and earnings.

Institutional & Insider Ownership

84.9% of National Interstate shares are held by institutional investors. Comparatively, 80.2% of ProAssurance shares are held by institutional investors. 11.8% of National Interstate shares are held by company insiders. Comparatively, 1.8% of ProAssurance shares are held by company 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.

Dividends

National Interstate pays an annual dividend of $0.56 per share and has a dividend yield of 1.7%. ProAssurance pays an annual dividend of $1.24 per share and has a dividend yield of 2.0%. National Interstate pays out 40.6% of its earnings in the form of a dividend. ProAssurance pays out 46.1% 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.

Analyst Recommendations

This is a summary of current ratings and recommmendations for National Interstate and ProAssurance, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
National Interstate 0 0 0 0 N/A
ProAssurance 0 4 0 0 2.00

ProAssurance has a consensus target price of $58.33, suggesting a potential downside of 7.41%. Given ProAssurance’s higher possible upside, analysts plainly believe ProAssurance is more favorable than National Interstate.

Valuation & Earnings

This table compares National Interstate and ProAssurance’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
National Interstate N/A N/A N/A $1.38 23.56
ProAssurance $870.21 million 3.87 $151.08 million $2.69 23.42

ProAssurance has higher revenue and earnings than National Interstate. ProAssurance is trading at a lower price-to-earnings ratio than National Interstate, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares National Interstate and ProAssurance’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
National Interstate 5.91% 10.13% 1.94%
ProAssurance 16.18% 6.75% 2.50%

Summary

ProAssurance beats National Interstate on 6 of the 10 factors compared between the two stocks.

National Interstate Company Profile

National Interstate Corporation and its subsidiaries operate as an insurance holding company that underwrites and sells traditional and alternative property and casualty insurance products to the passenger transportation, trucking and moving and storage industries, general commercial insurance to small businesses in Hawaii and Alaska and personal insurance to owners of recreational vehicles throughout the United States. The Company is a specialty property and casualty insurance company with a focus on the transportation industry. The Company operates through property and casualty insurance segment. The Company offers approximately 40 product lines in the specialty property and casualty insurance market, which it groups into approximately four general business components: alternative risk transfer (ART), transportation, specialty personal lines, and Hawaii and Alaska based on the class of business, insureds’ risk participation or geographic location.

ProAssurance Company Profile

ProAssurance Corporation (ProAssurance) is a holding company for property and casualty insurance companies. The Company provides professional liability insurance for healthcare professionals and facilities, professional liability insurance for attorneys, liability insurance for medical technology and life sciences risks, and workers’ compensation insurance. The Company operates through four segments. The Specialty property and casualty segment includes the Company’s professional liability business, and medical technology and life sciences business. The Workers’ compensation segment includes its workers’ compensation business. Lloyd’s Syndicate 1729 (Syndicate 1729) segment includes business of Syndicate 1729, which underwrites risks over a range of property and casualty insurance and reinsurance lines. The Corporate segment includes the Company’s investment operations managed at the corporate level and non-premium revenues generated outside of its insurance entities.

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