James River Group Holdings (NASDAQ: JRVR) and HCI Group (NYSE:HCI) are both small-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their dividends, risk, analyst recommendations, earnings, profitabiliy, institutional ownership and valuation.

Analyst Ratings

This is a breakdown of recent recommendations for James River Group Holdings and HCI Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
James River Group Holdings 0 1 2 0 2.67
HCI Group 0 1 1 0 2.50

James River Group Holdings currently has a consensus target price of $44.00, indicating a potential upside of 10.22%. HCI Group has a consensus target price of $45.00, indicating a potential upside of 4.41%. Given James River Group Holdings’ stronger consensus rating and higher possible upside, equities research analysts plainly believe James River Group Holdings is more favorable than HCI Group.

Profitability

This table compares James River Group Holdings and HCI Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
James River Group Holdings 11.45% 10.81% 3.27%
HCI Group 13.52% 15.65% 5.11%

Dividends

James River Group Holdings pays an annual dividend of $1.20 per share and has a dividend yield of 3.0%. HCI Group pays an annual dividend of $1.40 per share and has a dividend yield of 3.2%. James River Group Holdings pays out 45.3% of its earnings in the form of a dividend. HCI Group pays out 38.4% 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. HCI Group has raised its dividend for 3 consecutive years. HCI Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

James River Group Holdings has a beta of 0.55, suggesting that its share price is 45% less volatile than the S&P 500. Comparatively, HCI Group has a beta of 2.36, suggesting that its share price is 136% more volatile than the S&P 500.

Valuation & Earnings

This table compares James River Group Holdings and HCI Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
James River Group Holdings $699.18 million 1.68 $97.44 million $2.65 15.06
HCI Group $275.40 million 1.56 $78.55 million $3.65 11.81

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

Insider & Institutional Ownership

94.6% of James River Group Holdings shares are held by institutional investors. Comparatively, 74.9% of HCI Group shares are held by institutional investors. 41.0% of James River Group Holdings shares are held by insiders. Comparatively, 20.4% of HCI Group shares are held by 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.

Summary

James River Group Holdings beats HCI Group on 9 of the 17 factors compared between the two stocks.

James River Group Holdings Company Profile

James River Group Holdings, Ltd. (JRG Holdings) is an insurance and reinsurance holding company. The Company operates through four segments: Excess and Surplus Lines, Specialty Admitted Insurance, Casualty Reinsurance, and Corporate and Other. The Excess and Surplus Lines segment offers commercial excess and surplus lines liability and excess property insurance products. The Specialty Admitted Insurance segment offers workers’ compensation insurance coverage, as well as specialty admitted fronting and program business. The Casualty Reinsurance segment offers commercial liability and non-catastrophe property reinsurance to the United States insurance companies and to its the United States-based insurance subsidiaries. The Corporate and Other segment consists of certain management and treasury activities of James River Group, Inc., James River Group Holdings UK Limited and JRG Holdings. It owns six insurance companies focused on specialty insurance niches and a reinsurance company.

HCI Group Company Profile

HCI Group, Inc. (HCI) is an insurance holding company. The Company operates through four operating divisions: property and casualty insurance, reinsurance, investment real estate and information technology. Its operations include Insurance Operations and Other Operations. Its Insurance Operations include property and casualty insurance, and reinsurance. The Company, through its subsidiary, Homeowners Choice Property & Casualty Insurance Company, Inc. (HCPCI), provides property and casualty insurance to homeowners, condominium owners and tenants on properties located in Florida. HCPCI also offers flood-endorsed and wind-only policies to new and pre-existing Florida customers. Its Other Operations include information technology (IT) and real estate. The Company’s real estate operations consist of multiple properties it owns and operates.

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