Validus Holdings (NYSE: VR) and Everest Re Group (NYSE:RE) are both mid-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, dividends, risk, valuation and institutional ownership.

Analyst Recommendations

This is a breakdown of recent recommendations for Validus Holdings and Everest Re Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Validus Holdings 0 3 1 0 2.25
Everest Re Group 2 3 2 0 2.00

Validus Holdings presently has a consensus price target of $58.25, suggesting a potential upside of 8.76%. Everest Re Group has a consensus price target of $242.00, suggesting a potential downside of 9.50%. Given Validus Holdings’ stronger consensus rating and higher possible upside, research analysts plainly believe Validus Holdings is more favorable than Everest Re Group.

Profitability

This table compares Validus Holdings and Everest Re Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Validus Holdings 11.81% 7.75% 2.55%
Everest Re Group 19.65% 13.60% 5.12%

Dividends

Validus Holdings pays an annual dividend of $1.52 per share and has a dividend yield of 2.8%. Everest Re Group pays an annual dividend of $5.00 per share and has a dividend yield of 1.9%. Validus Holdings pays out 41.9% of its earnings in the form of a dividend. Everest Re Group pays out 17.1% 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. Validus Holdings has raised its dividend for 4 consecutive years and Everest Re Group has raised its dividend for 2 consecutive years. Validus Holdings is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Validus Holdings has a beta of 0.64, suggesting that its stock price is 36% less volatile than the S&P 500. Comparatively, Everest Re Group has a beta of 0.63, suggesting that its stock price is 37% less volatile than the S&P 500.

Earnings and Valuation

This table compares Validus Holdings and Everest Re Group’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Validus Holdings $2.48 billion 1.72 $538.06 million $3.63 14.75
Everest Re Group $6.14 billion 1.79 $1.20 billion $29.16 9.17

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

Insider and Institutional Ownership

97.8% of Validus Holdings shares are owned by institutional investors. Comparatively, 91.6% of Everest Re Group shares are owned by institutional investors. 2.3% of Validus Holdings shares are owned by company insiders. Comparatively, 1.3% of Everest Re Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

Everest Re Group beats Validus Holdings on 9 of the 17 factors compared between the two stocks.

About Validus Holdings

Validus Holdings, Ltd. is a holding company. The Company operates through four segments: Validus Re, Talbot, Western World and AlphaCat. Validus Re is a Bermuda-based reinsurance segment focused treaty reinsurance. Validus Re concentrates on first-party property and other reinsurance risks. Talbot is a specialty insurance segment operating within the Lloyd’s insurance market through Syndicate 1183. The Talbot segment is focused on a range of marine and energy, political lines, commercial property, financial lines, contingency, accident and health and aviation classes of business. Western World is a specialty excess and surplus lines insurance segment operating within the United States commercial market. AlphaCat is a Bermuda-based investment advisor, managing capital from third parties and the Company in insurance linked securities and other investments in the property catastrophe reinsurance space.

About Everest Re Group

Everest Re Group, Ltd., through its subsidiaries, is engaged in the underwriting of reinsurance and insurance in the United States, Bermuda and international markets. The Company operates in segments: U.S. Reinsurance, International, Bermuda and Insurance segment. The Company underwrites reinsurance both through brokers and directly with ceding companies. The Company underwrites insurance principally through general agent relationships, brokers and surplus lines brokers. The Company offers treaty and facultative reinsurance, and admitted and non-admitted insurance. Its products include the range of property and casualty reinsurance, and insurance coverage’s, including marine, aviation, surety, errors and omissions liability (E&O), directors’ and officers’ liability (D&O), medical malpractice, other specialty lines, accident and health (A&H) and workers’ compensation. Its subsidiaries include Everest Reinsurance (Bermuda), Ltd. (Bermuda Re) and Everest International Reinsurance, Ltd.

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