ProAssurance Corporation (NYSE: PRA) and Heritage Insurance Holdings (NYSE:HRTG) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, earnings, dividends, analyst recommendations, risk, valuation and institutional ownership.

Institutional & Insider Ownership

81.4% of ProAssurance Corporation shares are held by institutional investors. Comparatively, 57.6% of Heritage Insurance Holdings shares are held by institutional investors. 1.8% of ProAssurance Corporation shares are held by insiders. Comparatively, 16.1% of Heritage Insurance Holdings shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings and Valuation

This table compares ProAssurance Corporation and Heritage Insurance Holdings’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
ProAssurance Corporation $890.60 million 3.33 $212.38 million $2.78 19.96
Heritage Insurance Holdings $408.34 million 0.83 $43.38 million $0.72 16.29

ProAssurance Corporation has higher revenue and earnings than Heritage Insurance Holdings. Heritage Insurance Holdings is trading at a lower price-to-earnings ratio than ProAssurance Corporation, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

ProAssurance Corporation has a beta of 0.51, suggesting that its share price is 49% less volatile than the S&P 500. Comparatively, Heritage Insurance Holdings has a beta of 1.29, suggesting that its share price is 29% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings for ProAssurance Corporation and Heritage Insurance Holdings, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ProAssurance Corporation 0 3 0 0 2.00
Heritage Insurance Holdings 0 0 3 0 3.00

ProAssurance Corporation currently has a consensus target price of $60.50, indicating a potential upside of 9.01%. Heritage Insurance Holdings has a consensus target price of $16.33, indicating a potential upside of 39.24%. Given Heritage Insurance Holdings’ stronger consensus rating and higher probable upside, analysts clearly believe Heritage Insurance Holdings is more favorable than ProAssurance Corporation.

Dividends

ProAssurance Corporation pays an annual dividend of $1.24 per share and has a dividend yield of 2.2%. Heritage Insurance Holdings pays an annual dividend of $0.24 per share and has a dividend yield of 2.0%. ProAssurance Corporation pays out 44.6% of its earnings in the form of a dividend. Heritage Insurance Holdings pays out 33.3% 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.

Profitability

This table compares ProAssurance Corporation and Heritage Insurance Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ProAssurance Corporation 16.80% 6.59% 2.50%
Heritage Insurance Holdings 5.07% 5.67% 1.98%

Summary

ProAssurance Corporation beats Heritage Insurance Holdings on 10 of the 16 factors compared between the two stocks.

About ProAssurance Corporation

ProAssurance Corporation (ProAssurance) is a holding company for property and casualty insurance companies. The Company provides professional liability insurance for healthcare professionals and facilities, professional liability insurance for attorneys, liability insurance for medical technology and life sciences risks, and workers’ compensation insurance. The Company operates through four segments. The Specialty property and casualty segment includes the Company’s professional liability business, and medical technology and life sciences business. The Workers’ compensation segment includes its workers’ compensation business. Lloyd’s Syndicate 1729 (Syndicate 1729) segment includes business of Syndicate 1729, which underwrites risks over a range of property and casualty insurance and reinsurance lines. The Corporate segment includes the Company’s investment operations managed at the corporate level and non-premium revenues generated outside of its insurance entities.

About Heritage Insurance Holdings

Heritage Insurance Holdings, Inc. (Heritage Insurance) is a property and casualty insurance holding company. The Company provides personal and commercial residential insurance. Through its subsidiary, Heritage Property & Casualty Insurance Company (Heritage P&C), it provides personal residential insurance for single-family homeowners and condominium owners, rental property insurance and commercial residential insurance in the state of Florida and North Carolina. The Company is vertically integrated and controls or manages all aspects of insurance underwriting, customer service, actuarial analysis, distribution and claims processing and adjusting. The Company’s primary products are personal and commercial residential insurance, which it offers only in Florida. As of December 31, 2016, it marketed and wrote personal lines voluntary policies through a network of approximately 1,900 independent agents. It had 150,998 voluntary personal residential policies as of December 31, 2016.

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