RenaissanceRe (NYSE:RNR) and State Auto Financial (NASDAQ:STFC) are both finance companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, valuation, earnings, institutional ownership, analyst recommendations, risk and profitability.

Institutional & Insider Ownership

95.0% of RenaissanceRe shares are held by institutional investors. Comparatively, 33.5% of State Auto Financial shares are held by institutional investors. 1.6% of RenaissanceRe shares are held by insiders. Comparatively, 1.8% of State Auto Financial shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares RenaissanceRe and State Auto Financial’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
RenaissanceRe $2.07 billion 3.88 $227.36 million $9.17 19.87
State Auto Financial $1.28 billion 1.21 $12.80 million $1.20 29.72

RenaissanceRe has higher revenue and earnings than State Auto Financial. RenaissanceRe is trading at a lower price-to-earnings ratio than State Auto Financial, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares RenaissanceRe and State Auto Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
RenaissanceRe 18.18% 9.25% 2.12%
State Auto Financial 4.87% 6.86% 2.01%

Volatility & Risk

RenaissanceRe has a beta of 0.35, meaning that its share price is 65% less volatile than the S&P 500. Comparatively, State Auto Financial has a beta of 0.35, meaning that its share price is 65% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations for RenaissanceRe and State Auto Financial, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
RenaissanceRe 2 5 2 0 2.00
State Auto Financial 0 1 0 0 2.00

RenaissanceRe currently has a consensus price target of $160.00, indicating a potential downside of 12.20%. State Auto Financial has a consensus price target of $30.00, indicating a potential downside of 15.87%. Given RenaissanceRe’s higher possible upside, research analysts plainly believe RenaissanceRe is more favorable than State Auto Financial.

Dividends

RenaissanceRe pays an annual dividend of $1.36 per share and has a dividend yield of 0.7%. State Auto Financial pays an annual dividend of $0.40 per share and has a dividend yield of 1.1%. RenaissanceRe pays out 14.8% of its earnings in the form of a dividend. State Auto Financial pays out 33.3% 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. RenaissanceRe has raised its dividend for 14 consecutive years.

Summary

RenaissanceRe beats State Auto Financial on 12 of the 15 factors compared between the two stocks.

RenaissanceRe Company Profile

RenaissanceRe Holdings Ltd. provides reinsurance and insurance products in the United States and internationally. The company operates through Property, and Casualty and Specialty segments. The Property segment writes property catastrophe excess of loss reinsurance and excess of loss retrocessional reinsurance to insure insurance and reinsurance companies against natural and man-made catastrophes, including earthquakes, hurricanes, and tsunamis, as well as claims arising from other natural and man-made catastrophes comprising winter storms, freezes, floods, fires, windstorms, tornadoes, explosions, and acts of terrorism; and other property class of products, such as proportional reinsurance, property per risk, property reinsurance, and binding facilities and regional U.S. multi-line reinsurance. The Casualty and Specialty segment writes various classes of products, such as directors and officers, medical malpractice, and professional indemnity; automobile and employer's liability, casualty clash, umbrella or excess casualty, workers' compensation, and general liability; financial and mortgage guaranty, political risk, surety, and trade credit; and accident and health, agriculture, aviation, cyber, energy, marine, satellite, and terrorism. The company distributes its products and services primarily through intermediaries. RenaissanceRe Holdings Ltd. was founded in 1993 and is headquartered in Pembroke, Bermuda.

State Auto Financial Company Profile

State Auto Financial Corporation, through its subsidiaries, engages in writing personal and business 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. 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.

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