Analyzing W. R. Berkley (WRB) and Validus (VR)

W. R. Berkley (NYSE:WRB) and Validus (NYSE:VR) are both mid-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, valuation, earnings, risk, profitability and dividends.

Dividends

W. R. Berkley pays an annual dividend of $0.60 per share and has a dividend yield of 0.8%. Validus pays an annual dividend of $1.52 per share and has a dividend yield of 2.2%. W. R. Berkley pays out 24.4% of its earnings in the form of a dividend. Validus pays out -142.1% 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. W. R. Berkley has increased its dividend for 8 consecutive years and Validus has increased its dividend for 3 consecutive years. Validus is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk and Volatility

W. R. Berkley has a beta of 0.82, suggesting that its stock price is 18% less volatile than the S&P 500. Comparatively, Validus has a beta of 1.02, suggesting that its stock price is 2% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations for W. R. Berkley and Validus, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
W. R. Berkley 3 5 0 0 1.63
Validus 0 5 1 0 2.17

W. R. Berkley currently has a consensus price target of $71.17, indicating a potential downside of 3.74%. Validus has a consensus price target of $51.00, indicating a potential downside of 24.99%. Given W. R. Berkley’s higher possible upside, analysts plainly believe W. R. Berkley is more favorable than Validus.

Valuation and Earnings

This table compares W. R. Berkley and Validus’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
W. R. Berkley $7.68 billion 1.17 $549.09 million $2.46 30.05
Validus $2.80 billion 1.93 -$47.62 million ($1.07) -63.54

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

Institutional and Insider Ownership

72.5% of W. R. Berkley shares are held by institutional investors. Comparatively, 82.0% of Validus shares are held by institutional investors. 22.2% of W. R. Berkley shares are held by company insiders. Comparatively, 2.3% of Validus shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares W. R. Berkley and Validus’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
W. R. Berkley 8.54% 7.25% 1.62%
Validus -5.06% -2.69% -0.70%

Summary

W. R. Berkley beats Validus on 10 of the 17 factors compared between the two stocks.

W. R. Berkley Company Profile

W. R. Berkley Corporation, an insurance holding company, operates as a commercial lines writer in the United States and internationally. It operates through two segments, Insurance and Reinsurance. The Insurance segment underwrites commercial insurance business, including premises operations, commercial automobile, property, products liability, and professional liability lines. It also provides workers' compensation, property casualty, general liability, and excess and umbrella coverage insurance products, as well as coverages for technology, ambulatory surgery centers, chiropractors, and concierge physicians; accident and health insurance and reinsurance products; insurance for commercial risks; pollution liability and protective coverages to contractors and owners; and liquor liability and inland marine coverage for small to medium-sized insureds. In addition, this segment offers aviation insurance products; directors and officers, and surety risk products, as well as products for life sciences and travel industries; coverage for excess liability, construction wrap-ups, and completed operations; cyber risk solutions; casualty, group life, and crime-related insurance products; personal lines insurance solutions, including home, condo/co-op, and collectibles; automobile, law enforcement, public officials and educator's legal, and employment practices liability, as well as incidental medical insurance products; and at-risk and alternative risk insurance program management services. The Reinsurance segment provides other insurance companies and self-insureds with assistance in managing their net risk through reinsurance on a portfolio basis through treaty reinsurance or on an individual basis through facultative reinsurance. W. R. Berkley Corporation was founded in 1967 and is based in Greenwich, Connecticut.

Validus Company Profile

Validus Holdings, Ltd. provides reinsurance coverage, insurance coverage, and insurance linked securities management services worldwide. It operates through three segments: Reinsurance, Insurance, and Asset Management. The Reinsurance segment underwrites property reinsurance products on a catastrophe excess of loss, per risk excess of loss and proportional basis; and aerospace and aviation, agriculture, composite, marine, technical lines, terrorism, trade credit, workers' compensation, and other specialty lines, as well as casualty and financial lines. The Insurance segment underwrites property, accident and health, agriculture, aviation, contingency, marine, and political lines insurance products; bankers blanket bond, commercial crime, computer crime, cyber- crime, professional indemnity, and directors' and officers' insurance products for various financial institutions and other companies; and commercial and institutional risks comprising general, professional, and product liability, as well as miscellaneous malpractice insurance products. This segment also underwrites marine and energy liability, and political risk insurance products, as well as insurance products for repair, maintenance, and upkeep of aircrafts and premises for small companies. The Asset Management segment manages capital for third parties through insurance-linked securities, and other property catastrophe and specialty reinsurance investments. Validus Holdings, Ltd. was founded in 2005 and is based in Pembroke, Bermuda.

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