Alleghany (NYSE: Y) and Employers (NYSE:EIG) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, risk, valuation, institutional ownership, earnings, analyst recommendations and profitability.
Employers pays an annual dividend of $0.60 per share and has a dividend yield of 1.2%. Alleghany does not pay a dividend. Employers pays out 18.8% of its earnings in the form of a dividend.
Earnings and Valuation
This table compares Alleghany and Employers’ revenue, earnings per share and valuation.
||Earnings Per Share
Alleghany has higher revenue and earnings than Employers. Alleghany is trading at a lower price-to-earnings ratio than Employers, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of current ratings and recommmendations for Alleghany and Employers, as reported by MarketBeat.
||Strong Buy Ratings
Alleghany presently has a consensus target price of $625.00, indicating a potential upside of 6.95%. Employers has a consensus target price of $44.50, indicating a potential downside of 8.25%. Given Alleghany’s stronger consensus rating and higher probable upside, equities analysts clearly believe Alleghany is more favorable than Employers.
Institutional & Insider Ownership
82.2% of Alleghany shares are owned by institutional investors. Comparatively, 77.4% of Employers shares are owned by institutional investors. 4.0% of Alleghany shares are owned by company insiders. Comparatively, 3.5% of Employers shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
Volatility & Risk
Alleghany has a beta of 0.96, meaning that its stock price is 4% less volatile than the S&P 500. Comparatively, Employers has a beta of 1.13, meaning that its stock price is 13% more volatile than the S&P 500.
This table compares Alleghany and Employers’ net margins, return on equity and return on assets.
||Return on Equity
||Return on Assets
Alleghany Corporation is an insurance holding company. The Company, through its subsidiary Alleghany Insurance Holdings LLC (AIHL) and its subsidiaries, is engaged in the property and casualty insurance business. AIHL’s insurance operations are conducted by its subsidiaries RSUI Group, Inc. (RSUI), CapSpecialty, Inc. (CapSpecialty) and Pacific Compensation Corporation (PacificComp). Its segments include reinsurance and insurance. Its reinsurance segment consists of property and casualty reinsurance operations conducted by Transatlantic Holdings, Inc. reinsurance operating subsidiaries. Its insurance segment consists of property and casualty insurance operations conducted by AIHL through its insurance operating subsidiaries RSUI, CapSpecialty and PacificComp. AIHL Re LLC, which is a captive reinsurance company, provides reinsurance to its insurance operating subsidiaries and affiliates.
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.
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