Employers Holdings (NYSE: EIG) and Allied World Assurance Company Hldgs (NYSE:AWH) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, valuation, profitability, analyst recommendations, dividends, earnings and institutional ownership.

Analyst Recommendations

This is a summary of current ratings and price targets for Employers Holdings and Allied World Assurance Company Hldgs, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Employers Holdings 1 1 1 0 2.00
Allied World Assurance Company Hldgs 0 5 0 0 2.00

Employers Holdings presently has a consensus price target of $44.50, indicating a potential downside of 6.51%. Allied World Assurance Company Hldgs has a consensus price target of $39.25, indicating a potential downside of 20.29%. Given Employers Holdings’ higher probable upside, research analysts clearly believe Employers Holdings is more favorable than Allied World Assurance Company Hldgs.

Institutional & Insider Ownership

77.4% of Employers Holdings shares are owned by institutional investors. Comparatively, 86.5% of Allied World Assurance Company Hldgs shares are owned by institutional investors. 4.0% of Employers Holdings shares are owned by insiders. Comparatively, 3.2% of Allied World Assurance Company Hldgs shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Risk & Volatility

Employers Holdings has a beta of 1.13, meaning that its share price is 13% more volatile than the S&P 500. Comparatively, Allied World Assurance Company Hldgs has a beta of 0.7, meaning that its share price is 30% less volatile than the S&P 500.

Profitability

This table compares Employers Holdings and Allied World Assurance Company Hldgs’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Employers Holdings 13.32% 10.39% 2.40%
Allied World Assurance Company Hldgs 12.56% 8.96% 2.42%

Dividends

Employers Holdings pays an annual dividend of $0.60 per share and has a dividend yield of 1.3%. Allied World Assurance Company Hldgs pays an annual dividend of $0.52 per share and has a dividend yield of 1.1%. Employers Holdings pays out 18.8% of its earnings in the form of a dividend. Allied World Assurance Company Hldgs pays out 17.5% 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. Allied World Assurance Company Hldgs has raised its dividend for 3 consecutive years.

Valuation and Earnings

This table compares Employers Holdings and Allied World Assurance Company Hldgs’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Employers Holdings $779.80 million 1.98 $106.70 million $3.19 14.92
Allied World Assurance Company Hldgs N/A N/A N/A $2.97 16.58

Employers Holdings has higher revenue and earnings than Allied World Assurance Company Hldgs. Employers Holdings is trading at a lower price-to-earnings ratio than Allied World Assurance Company Hldgs, indicating that it is currently the more affordable of the two stocks.

Summary

Employers Holdings beats Allied World Assurance Company Hldgs on 9 of the 13 factors compared between the two stocks.

Employers Holdings Company Profile

Employers Holdings, Inc. is a holding company. Through its insurance subsidiaries, the Company provides workers’ compensation insurance coverage to select, small businesses in low to medium hazard industries. It provides workers’ compensation insurance under a statutory system wherein employers are required to provide coverage for their employees’ medical, disability, vocational rehabilitation, and/or death benefit costs for work-related injuries or illnesses. As of December 31, 2016 the Company provided workers’ compensation insurance in 36 states and the District of Columbia, with a concentration in California. Its insurance subsidiaries include Employers Insurance Company of Nevada (EICN), Employers Compensation Insurance Company (ECIC), Employers Preferred Insurance Company (EPIC) and Employers Assurance Company (EAC). The Company’s insurance products are jointly offered and marketed with and through its partners and alliances.

Allied World Assurance Company Hldgs Company Profile

Allied World Assurance Company Holdings Ltd is a Germany-based holding company. It provides property, casualty and specialty insurance and reinsurance solutions to clients around the world. The Company operates in three segments: North American Insurance, Global Markets Insurance and Reinsurance. The North American Insurance segment consists of the Company’s direct insurance operations in the United States, Bermuda and Canada. The Global Markets Insurance segment includes all of the Company’s direct insurance operations outside of North America. The Company’s reinsurance segment includes the reinsurance of property, general casualty, professional liability, specialty lines and property catastrophe coverage’s written by other reinsurance companies. The Company leases space in Australia, Bermuda, Canada, Hong Kong, Ireland, Labuan, Singapore, the United Kingdom and the United States for the operation of its North American Insurance, Global Markets Insurance and Reinsurance segments.

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