HCI Group (NYSE: HCI) and EMC Insurance Group (NASDAQ:EMCI) are both small-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, analyst recommendations, risk, dividends, earnings, institutional ownership and profitability.

Dividends

HCI Group pays an annual dividend of $1.40 per share and has a dividend yield of 3.6%. EMC Insurance Group pays an annual dividend of $0.84 per share and has a dividend yield of 2.9%. HCI Group pays out 38.4% of its earnings in the form of a dividend. EMC Insurance Group pays out 46.9% 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. EMC Insurance Group has raised its dividend for 3 consecutive years. HCI Group is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

HCI Group has a beta of 2.31, indicating that its stock price is 131% more volatile than the S&P 500. Comparatively, EMC Insurance Group has a beta of 0.92, indicating that its stock price is 8% less volatile than the S&P 500.

Valuation & Earnings

This table compares HCI Group and EMC Insurance Group’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
HCI Group $275.40 million 1.41 $79.13 million $3.65 10.69
EMC Insurance Group $649.90 million 0.96 $38.22 million $1.79 16.29

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

Institutional and Insider Ownership

71.5% of HCI Group shares are owned by institutional investors. Comparatively, 28.2% of EMC Insurance Group shares are owned by institutional investors. 20.4% of HCI Group shares are owned by insiders. Comparatively, 4.5% of EMC Insurance Group shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares HCI Group and EMC Insurance Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
HCI Group 13.52% 15.65% 5.11%
EMC Insurance Group 5.87% 5.66% 1.98%

Analyst Recommendations

This is a breakdown of current recommendations for HCI Group and EMC Insurance Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
HCI Group 0 1 2 0 2.67
EMC Insurance Group 0 1 0 0 2.00

HCI Group currently has a consensus price target of $43.33, indicating a potential upside of 11.08%. EMC Insurance Group has a consensus price target of $30.00, indicating a potential upside of 2.92%. Given HCI Group’s stronger consensus rating and higher probable upside, analysts clearly believe HCI Group is more favorable than EMC Insurance Group.

Summary

HCI Group beats EMC Insurance Group on 14 of the 17 factors compared between the two stocks.

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.

EMC Insurance Group Company Profile

EMC Insurance Group Inc. is an insurance holding company. The Company operates through two segments: Property and Casualty Insurance and Reinsurance segment. It conducts its property and casualty insurance operations through its subsidiaries, including EMCASCO Insurance Company, Illinois EMCASCO Insurance Company and Dakota Fire Insurance Company, and its reinsurance operations through its subsidiary, EMC Reinsurance Company. The Company focuses on the sale of commercial lines of property and casualty insurance to small and medium-sized businesses. The Company offered its insurance products in 41 states, as of December 31, 2016. The Company is owned by Employers Mutual Casualty Company (Employers Mutual), a multiple-line property and casualty insurance company. The Company’s insurance agency, EMC Underwriters, LLC (EMC Underwriters), specializes in marketing excess and surplus lines of insurance.

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