Heritage Insurance (NYSE:HRTG) and Employers (NYSE:EIG) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, earnings, risk, analyst recommendations, valuation, institutional ownership and profitability.

Valuation and Earnings

This table compares Heritage Insurance and Employers’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Heritage Insurance $406.62 million 1.00 -$1.11 million $1.53 10.03
Employers $799.30 million 1.88 $101.20 million $2.89 15.87

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

Analyst Recommendations

This is a summary of recent ratings and target prices for Heritage Insurance and Employers, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Heritage Insurance 0 1 4 0 2.80
Employers 0 1 1 0 2.50

Heritage Insurance currently has a consensus target price of $20.60, indicating a potential upside of 34.20%. Employers has a consensus target price of $53.00, indicating a potential upside of 15.59%. Given Heritage Insurance’s stronger consensus rating and higher probable upside, equities analysts clearly believe Heritage Insurance is more favorable than Employers.

Dividends

Heritage Insurance pays an annual dividend of $0.24 per share and has a dividend yield of 1.6%. Employers pays an annual dividend of $0.80 per share and has a dividend yield of 1.7%. Heritage Insurance pays out 15.7% of its earnings in the form of a dividend. Employers pays out 27.7% 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. Employers has increased its dividend for 2 consecutive years. Employers is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Heritage Insurance and Employers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Heritage Insurance 0.79% 10.66% 2.15%
Employers 15.10% 12.51% 3.05%

Risk & Volatility

Heritage Insurance has a beta of 1.22, meaning that its share price is 22% more volatile than the S&P 500. Comparatively, Employers has a beta of 1.04, meaning that its share price is 4% more volatile than the S&P 500.

Institutional & Insider Ownership

77.2% of Heritage Insurance shares are owned by institutional investors. Comparatively, 78.6% of Employers shares are owned by institutional investors. 25.3% of Heritage Insurance shares are owned by insiders. Comparatively, 3.0% of Employers shares are owned by 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.

Summary

Employers beats Heritage Insurance on 11 of the 17 factors compared between the two stocks.

Heritage Insurance Company Profile

Heritage Insurance Holdings, Inc., through its subsidiaries, provides personal and commercial residential insurance products. The company offers personal residential property insurance for single-family homeowners and condominium owners; rental property insurance; and commercial residential insurance, as well as residential wind-only property insurance in Alabama, Connecticut, Florida, Georgia, Hawaii, Massachusetts, New York, New Jersey, North Carolina, Rhode Island, and South Carolina. As of December 31, 2017, it had approximately 521,350 personal residential policies and 3,100 commercial residential policies. The company markets and writes its voluntary personal line policies through a network of retail independent agents, wholesale agents, and a partnership with a direct agency, as well as indirectly to approximately 1,500 retail locations through 8 wholesale agency relationships. It also provides restoration, and emergency and recovery services; and property management, retail agency, and reinsurance services. The company was founded in 2012 and is headquartered in Clearwater, Florida.

Employers Company Profile

Employers Holdings, Inc., through its subsidiaries, operates in the commercial property and casualty insurance industry primarily in the United States. It offers workers' compensation insurance to small businesses in low to medium hazard industries. The company markets its products through independent local, regional, and national agents and brokers; and alternative distribution channels comprising its partners, as well as through national, regional, and local trade groups and associations. Employers Holdings, Inc. was founded in 2000 and is based in Reno, Nevada.

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