First Financial (NASDAQ: THFF) and Selective Insurance Group (NASDAQ:SIGI) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, earnings, dividends, profitability, risk and institutional ownership.

Volatility & Risk

First Financial has a beta of 0.85, meaning that its share price is 15% less volatile than the S&P 500. Comparatively, Selective Insurance Group has a beta of 1.45, meaning that its share price is 45% more volatile than the S&P 500.

Profitability

This table compares First Financial and Selective Insurance Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
First Financial 23.48% 8.11% 1.17%
Selective Insurance Group 7.36% 11.00% 2.37%

Valuation and Earnings

This table compares First Financial and Selective Insurance Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
First Financial $156.31 million 3.61 $38.41 million $2.85 16.21
Selective Insurance Group $2.28 billion 1.51 $158.49 million $3.01 19.67

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

Institutional & Insider Ownership

53.7% of First Financial shares are held by institutional investors. Comparatively, 77.8% of Selective Insurance Group shares are held by institutional investors. 3.6% of First Financial shares are held by company insiders. Comparatively, 3.0% of Selective Insurance Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

First Financial pays an annual dividend of $1.00 per share and has a dividend yield of 2.2%. Selective Insurance Group pays an annual dividend of $0.72 per share and has a dividend yield of 1.2%. First Financial pays out 35.1% of its earnings in the form of a dividend. Selective Insurance Group pays out 23.9% 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.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for First Financial and Selective Insurance Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Financial 0 1 0 0 2.00
Selective Insurance Group 0 4 0 0 2.00

First Financial presently has a consensus target price of $49.00, suggesting a potential upside of 6.06%. Selective Insurance Group has a consensus target price of $50.91, suggesting a potential downside of 14.00%. Given First Financial’s higher possible upside, research analysts clearly believe First Financial is more favorable than Selective Insurance Group.

Summary

Selective Insurance Group beats First Financial on 9 of the 14 factors compared between the two stocks.

First Financial Company Profile

First Financial Corporation is a financial holding company. The Company, through its subsidiaries, offers financial services, including commercial, mortgage and consumer lending, lease financing, trust account services, depositor services and insurance services. The Company’s subsidiaries include First Financial Bank, N.A. (the Bank), The Morris Plan Company of Terre Haute (Morris Plan), First Chanticleer Corporation and FFB Risk Management Co., Inc. The Bank has two investment subsidiaries, Portfolio Management Specialists A (Specialists A) and Portfolio Management Specialists B (Specialists B), which holds and manages certain assets to manage various income streams and provides opportunities for capital creation as needed. The Bank’s loan portfolio includes commercial loans, residential loans and consumer loans. Its deposits include non-interest-bearing demand deposits, interest-bearing demand deposits, savings deposits, time deposits: $100,000 or more, and other time deposits.

Selective Insurance Group Company Profile

Selective Insurance Group, Inc. is a holding company. As of December 31, 2016, the Company had 10 insurance subsidiaries, nine of which were licensed by various state departments of insurance to write specific lines of property and casualty insurance business. The remaining subsidiary is authorized by various state insurance departments to write property and casualty insurance in the excess and surplus lines (E&S) market. Its segments include Standard Commercial Lines, which consists of insurance products and services provided in the standard marketplace; Standard Personal Lines, which consists of insurance products and services, including flood insurance coverage that it writes through the National Flood Insurance Program (NFIP); E&S Lines, which consists of insurance products and services provided to customers not obtaining coverage in the standard marketplace, and investment segment invests insurance premiums, as well as amounts generated through its capital management strategies.

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