Universal Insurance (NYSE: UVE) and Travelers Companies (NYSE:TRV) are both financials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, risk, valuation, dividends, earnings, profitability and institutional ownership.

Volatility and Risk

Universal Insurance has a beta of 1.88, suggesting that its share price is 88% more volatile than the S&P 500. Comparatively, Travelers Companies has a beta of 1.25, suggesting that its share price is 25% more volatile than the S&P 500.

Profitability

This table compares Universal Insurance and Travelers Companies’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Universal Insurance 11.55% 20.90% 6.30%
Travelers Companies 8.56% 9.87% 2.28%

Dividends

Universal Insurance pays an annual dividend of $0.56 per share and has a dividend yield of 2.0%. Travelers Companies pays an annual dividend of $2.88 per share and has a dividend yield of 2.2%. Universal Insurance pays out 23.9% of its earnings in the form of a dividend. Travelers Companies pays out 33.3% 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. Universal Insurance has raised its dividend for 4 consecutive years and Travelers Companies has raised its dividend for 9 consecutive years. Travelers Companies is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Universal Insurance and Travelers Companies, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Universal Insurance 0 0 1 0 3.00
Travelers Companies 2 6 7 0 2.33

Universal Insurance presently has a consensus price target of $29.00, suggesting a potential upside of 1.05%. Travelers Companies has a consensus price target of $133.11, suggesting a potential upside of 0.58%. Given Universal Insurance’s stronger consensus rating and higher possible upside, equities analysts clearly believe Universal Insurance is more favorable than Travelers Companies.

Valuation & Earnings

This table compares Universal Insurance and Travelers Companies’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Universal Insurance $685.29 million 1.44 $99.41 million $2.34 12.26
Travelers Companies $27.63 billion 1.31 $3.01 billion $8.64 15.32

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

Institutional & Insider Ownership

78.0% of Universal Insurance shares are owned by institutional investors. Comparatively, 78.5% of Travelers Companies shares are owned by institutional investors. 10.5% of Universal Insurance shares are owned by insiders. Comparatively, 0.8% of Travelers Companies shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

Universal Insurance beats Travelers Companies on 9 of the 17 factors compared between the two stocks.

Universal Insurance Company Profile

Universal Insurance Holdings, Inc. (UVE) is a private personal residential homeowners insurance company in Florida. The Company performs substantially all aspects of insurance underwriting, policy issuance, general administration, and claims processing and settlement internally. The Company’s subsidiaries include Universal Property & Casualty Insurance Company (UPCIC) and American Platinum Property and Casualty Insurance Company (APPCIC). UPCIC writes homeowners insurance policies in states, including Alabama, Delaware, Florida, Georgia, Hawaii, Indiana, Maryland, Massachusetts, Michigan, Minnesota, North Carolina, Pennsylvania, South Carolina and Virginia. APPCIC writes homeowners and commercial residential insurance policies in Florida. The Company has developed a suite of applications that provide underwriting, policy and claim administration services, including billing, policy maintenance, inspections, refunds, commissions and data analysis.

Travelers Companies Company Profile

The Travelers Companies, Inc. is a holding company. The Company’s segments include Business and International Insurance; Bond & Specialty Insurance, and Personal Insurance. Through its subsidiaries, it provides commercial and personal property and casualty insurance products and services. The Business and International Insurance segment offers property and casualty insurance and insurance related services to its clients, in the United States and in Canada, as well as in the United Kingdom, the Republic of Ireland, Brazil and throughout other parts of the world. The Bond & Specialty Insurance segment provides surety, fidelity, management liability, professional liability, and other property and casualty coverages and related risk management services to a range of primarily domestic customers, utilizing various degrees of financially-based underwriting approaches. The Personal Insurance segment writes a range of property and casualty insurance covering individuals’ personal risks.

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