Tiptree (NASDAQ:TIPT) versus Root (NASDAQ:ROOT) Head-To-Head Analysis

Root (NASDAQ:ROOT) and Tiptree (NASDAQ:TIPT) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, earnings, dividends, profitability, risk and valuation.

Analyst Ratings

This is a breakdown of current ratings and target prices for Root and Tiptree, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Root	0	5	4	0	2.44
Tiptree	0	0	0	0	N/A

Root currently has a consensus price target of $47.78, indicating a potential upside of 33.35%. Given Root’s higher possible upside, equities research analysts plainly believe Root is more favorable than Tiptree.

Profitability

This table compares Root and Tiptree’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Root	-9.81%	-50.80%	-6.08%
Tiptree	1.62%	11.97%	1.37%

Risk and Volatility

Root has a beta of 2.54, meaning that its stock price is 154% more volatile than the S&P 500. Comparatively, Tiptree has a beta of 1.31, meaning that its stock price is 31% more volatile than the S&P 500.

Institutional & Insider Ownership

59.8% of Root shares are held by institutional investors. Comparatively, 37.8% of Tiptree shares are held by institutional investors. 11.7% of Root shares are held by company insiders. Comparatively, 31.8% of Tiptree shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Root and Tiptree’s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Root	$854.20 million	0.62	-$147.40 million	($7.77)	-4.61
Tiptree	$1.65 billion	0.42	$13.95 million	$0.57	33.21

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

Summary

Tiptree beats Root on 8 of the 13 factors compared between the two stocks.

About Root

Root, Inc. provides insurance products and services in the United States. The company offers automobile, homeowners, and renters insurance products. It operates a direct-to-consumer model; and serves customers primarily through mobile applications, as well as through its website. The company's direct distribution channels also cover digital, media, and referral channels, as well as distribution partners and agencies. Root, Inc. was incorporated in 2015 and is headquartered in Columbus, Ohio.

About Tiptree

Tiptree Inc., through its subsidiaries, provides specialty insurance products and related services primarily in the United States. It operates through two segments: Insurance and Mortgage. The company offers niche; commercial lines insurance products, including professional liability, general liability, contractual liability protection, property and other short-tail, and alternative risks insurance products; and personal lines insurance products, such as credit protection surrounding loan payments. It also provides auto and consumer warranty programs, including mobile devices, consumer electronics, appliances, furniture; and vehicle service contracts, GAP, and ancillary products; as well as premium or warranty contract financing services, lead generation support, and business process outsourcing services. In addition, the company offers mortgage loans for institutional investors; asset management services; and maritime shipping and asset management services, as well as invests in shares. It markets its products through a network of independent insurance agents, consumer finance companies, online retailers, auto dealers, and regional big box retailers. The company was formerly known as Tiptree Financial Inc. and changed its name to Tiptree Inc. in December 2016. Tiptree Inc. was founded in 1978 and is headquartered in Greenwich, Connecticut.