XL Group (NYSE: XL) and United Fire Group (NASDAQ:UFCS) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, earnings, analyst recommendations, valuation, profitabiliy and risk.

Volatility & Risk

XL Group has a beta of 1.02, meaning that its stock price is 2% more volatile than the S&P 500. Comparatively, United Fire Group has a beta of 0.78, meaning that its stock price is 22% less volatile than the S&P 500.

Dividends

XL Group pays an annual dividend of $0.88 per share and has a dividend yield of 2.0%. United Fire Group pays an annual dividend of $1.12 per share and has a dividend yield of 2.5%. XL Group pays out 42.1% of its earnings in the form of a dividend. United Fire Group pays out 61.2% 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. XL Group has increased its dividend for 4 consecutive years.

Valuation & Earnings

This table compares XL Group and United Fire Group’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
XL Group $10.88 billion 1.08 $1.22 billion $2.09 21.51
United Fire Group $1.15 billion 0.97 $60.56 million $1.83 24.06

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

Insider & Institutional Ownership

97.4% of XL Group shares are owned by institutional investors. Comparatively, 59.5% of United Fire Group shares are owned by institutional investors. 2.6% of XL Group shares are owned by company insiders. Comparatively, 5.9% of United Fire Group shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings and target prices for XL Group and United Fire Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
XL Group 0 6 6 0 2.50
United Fire Group 0 2 0 0 2.00

XL Group currently has a consensus price target of $43.70, indicating a potential downside of 2.78%. United Fire Group has a consensus price target of $46.00, indicating a potential upside of 4.47%. Given United Fire Group’s higher possible upside, analysts clearly believe United Fire Group is more favorable than XL Group.

Profitability

This table compares XL Group and United Fire Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
XL Group 5.25% 3.71% 0.82%
United Fire Group 4.11% 4.42% 1.03%

Summary

XL Group beats United Fire Group on 11 of the 17 factors compared between the two stocks.

XL Group Company Profile

XL Group plc is an insurance and reinsurance company providing property, casualty and specialty products to industrial, commercial and professional firms, insurance companies and other enterprises. The Company operates through two segments: Insurance and Reinsurance. The Company’s Insurance segment is organized into four product divisions: Global Casualty (Casualty); Global Energy Property, & Construction (EPC); Global Professional (Professional), and Global Specialty (Specialty). Its insurance operations provide insurance policies for corporate risks that may require large limits, use of a captive insurance company and the need for a program of locally issued policies. The Reinsurance segment provides casualty, property risk, property catastrophe, specialty, and other reinsurance lines on a global basis with business being written on both a proportional and non-proportional treaty basis, and also on a facultative basis.

United Fire Group Company Profile

United Fire Group, Inc., formerly United Fire & Casualty Company, is engaged in the business of writing property and casualty insurance and life insurance and selling annuities. The Company operates in two segments: property and casualty insurance, and life insurance. The Company’s property and casualty insurance segment consists of commercial lines insurance, including surety bonds, personal lines insurance and assumed insurance. Its life insurance segment consists of deferred and immediate annuities, universal life insurance products and traditional life insurance products. Its life insurance segment consists solely of the operations of United Life Insurance Company. On February 1, 2012, the Company completed a holding company reorganization of United Fire Group, Inc., United Fire & Casualty Company and UFC MergeCo, Inc. On March 28, 2011, the Company acquired Mercer Insurance Group, Inc. (Mercer Insurance Group).

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