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

Volatility & Risk

RenaissanceRe Holdings has a beta of 0.65, meaning that its share price is 35% less volatile than the S&P 500. Comparatively, Validus Holdings has a beta of 0.65, meaning that its share price is 35% less volatile than the S&P 500.

Profitability

This table compares RenaissanceRe Holdings and Validus Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
RenaissanceRe Holdings 28.30% 8.49% 2.92%
Validus Holdings 11.81% 7.75% 2.55%

Dividends

RenaissanceRe Holdings pays an annual dividend of $1.28 per share and has a dividend yield of 0.9%. Validus Holdings pays an annual dividend of $1.52 per share and has a dividend yield of 3.2%. RenaissanceRe Holdings pays out 10.9% of its earnings in the form of a dividend. Validus Holdings pays out 41.9% 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. RenaissanceRe Holdings has raised its dividend for 12 consecutive years and Validus Holdings has raised its dividend for 2 consecutive years.

Insider and Institutional Ownership

91.8% of RenaissanceRe Holdings shares are held by institutional investors. Comparatively, 94.8% of Validus Holdings shares are held by institutional investors. 1.8% of RenaissanceRe Holdings shares are held by company insiders. Comparatively, 2.3% of Validus Holdings shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Valuation & Earnings

This table compares RenaissanceRe Holdings and Validus Holdings’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
RenaissanceRe Holdings $1.77 billion 3.09 $710.24 million $11.74 11.57
Validus Holdings $2.48 billion 1.51 $538.06 million $3.63 13.01

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

Analyst Recommendations

This is a breakdown of current recommendations and price targets for RenaissanceRe Holdings and Validus Holdings, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
RenaissanceRe Holdings 0 7 1 0 2.13
Validus Holdings 0 3 2 0 2.40

RenaissanceRe Holdings presently has a consensus price target of $143.85, suggesting a potential upside of 5.86%. Validus Holdings has a consensus price target of $57.00, suggesting a potential upside of 20.71%. Given Validus Holdings’ stronger consensus rating and higher possible upside, analysts plainly believe Validus Holdings is more favorable than RenaissanceRe Holdings.

Summary

RenaissanceRe Holdings beats Validus Holdings on 9 of the 16 factors compared between the two stocks.

RenaissanceRe Holdings Company Profile

RenaissanceRe Holdings Ltd. provides reinsurance and insurance coverages and related services to a range of customers. The Company’s products include property, casualty and specialty reinsurance and certain insurance products principally distributed through intermediaries. Its segments include Property; Casualty and Specialty, and Other category. The Property segment consisted of catastrophe and other property reinsurance and insurance written on behalf of its operating subsidiaries and certain joint ventures managed by its ventures unit. The Casualty and Specialty segment consisted of casualty and specialty reinsurance and insurance written on behalf of its operating subsidiaries and certain joint ventures managed by its ventures unit. Its Other category includes its strategic investments, investments unit, corporate expenses, capital servicing. The Casualty and Specialty segment offers certain casualty insurance products through RenaissanceRe Syndicate 1458 (Syndicate 1458).

Validus Holdings Company Profile

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.

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