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

Institutional & Insider Ownership

76.2% of HCI Group shares are owned by institutional investors. Comparatively, 85.8% of Essent Group shares are owned by institutional investors. 20.4% of HCI Group shares are owned by insiders. Comparatively, 18.1% of Essent Group shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for HCI Group and Essent Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
HCI Group 0 1 2 0 2.67
Essent Group 0 2 6 0 2.75

HCI Group currently has a consensus target price of $43.33, indicating a potential upside of 43.87%. Essent Group has a consensus target price of $45.88, indicating a potential upside of 0.34%. Given HCI Group’s higher probable upside, research analysts clearly believe HCI Group is more favorable than Essent Group.

Valuation & Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
HCI Group $264.45 million 1.11 $29.02 million ($1.89) -15.94
Essent Group $458.26 million 9.82 $222.60 million $2.99 15.29

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

Dividends

HCI Group pays an annual dividend of $1.40 per share and has a dividend yield of 4.6%. Essent Group does not pay a dividend. HCI Group pays out -74.1% of its earnings in the form of a dividend. HCI Group has increased its dividend for 3 consecutive years.

Profitability

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

Net Margins Return on Equity Return on Assets
HCI Group -5.63% -6.34% -1.75%
Essent Group 51.64% 18.55% 13.15%

Risk & Volatility

HCI Group has a beta of 2.18, meaning that its share price is 118% more volatile than the S&P 500. Comparatively, Essent Group has a beta of 1.15, meaning that its share price is 15% more volatile than the S&P 500.

Summary

Essent Group beats HCI Group on 10 of the 16 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.

Essent Group Company Profile

Essent Group Ltd. is a private mortgage insurance company. The Company is engaged in offering private mortgage insurance and reinsurance for mortgages secured by residential properties located in the United States. Its products and services include mortgage insurance, contract underwriting, and Bermuda-based insurance and reinsurance. The Company’s primary mortgage insurance is offered to customers on individual loans at the time of origination on a flow basis, but can also be written in bulk transactions. Its pool insurance provides additional credit enhancement for certain secondary market and other mortgage transactions. The primary mortgage insurance operations were conducted through Essent Guaranty, Inc. which is a mortgage insurer licensed to write mortgage insurance in all 50 states and the District of Columbia, as of December 31, 2016. It offers primary mortgage insurance, pool insurance and master policy. It provides contract underwriting services through CUW Solutions, LLC.

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