Hanover Insurance Group (NYSE: THG) and Employers (NYSE:EIG) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their valuation, profitability, risk, analyst recommendations, dividends, earnings and institutional ownership.

Profitability

This table compares Hanover Insurance Group and Employers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hanover Insurance Group 2.37% 3.35% 0.67%
Employers 13.32% 10.39% 2.40%

Earnings and Valuation

This table compares Hanover Insurance Group and Employers’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Hanover Insurance Group $4.95 billion 0.95 $155.10 million $2.82 39.32
Employers $779.80 million 1.80 $106.70 million $3.19 13.54

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

Institutional and Insider Ownership

83.8% of Hanover Insurance Group shares are held by institutional investors. Comparatively, 77.4% of Employers shares are held by institutional investors. 1.1% of Hanover Insurance Group shares are held by company insiders. Comparatively, 3.5% of Employers shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Volatility and Risk

Hanover Insurance Group has a beta of 1.14, meaning that its stock price is 14% more volatile than the S&P 500. Comparatively, Employers has a beta of 1.14, meaning that its stock price is 14% more volatile than the S&P 500.

Dividends

Hanover Insurance Group pays an annual dividend of $2.16 per share and has a dividend yield of 1.9%. Employers pays an annual dividend of $0.60 per share and has a dividend yield of 1.4%. Hanover Insurance Group pays out 76.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Employers pays out 18.8% of its earnings in the form of a dividend. Hanover Insurance Group has raised its dividend for 6 consecutive years and Employers has raised its dividend for 2 consecutive years. Hanover Insurance Group 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 recommmendations for Hanover Insurance Group and Employers, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hanover Insurance Group 0 1 0 0 2.00
Employers 1 0 1 0 2.00

Hanover Insurance Group presently has a consensus target price of $91.00, indicating a potential downside of 17.92%. Employers has a consensus target price of $44.50, indicating a potential upside of 3.01%. Given Employers’ higher possible upside, analysts clearly believe Employers is more favorable than Hanover Insurance Group.

Summary

Employers beats Hanover Insurance Group on 9 of the 15 factors compared between the two stocks.

About Hanover Insurance Group

The Hanover Insurance Group, Inc. is a holding company. The Company is engaged in providing property and casualty insurance products and services. The Company has four segments: Commercial Lines, Personal Lines, Chaucer and Other. It markets its domestic products and services through independent agents and brokers in the United States, and conducts business internationally through a subsidiary, Chaucer Holdings Limited, which operates through the Society and Corporation of Lloyd’s (Lloyd’s). Its Commercial Lines product suite provides agents and customers with products designed for small, middle and specialized markets. Its Personal Lines coverages include other personal lines, which consist of umbrella and fire, among others. The Chaucer segment consists of international business written through Lloyd’s, including marine and aviation, and property. The Other segment consists of Opus Investment Management, Inc. (Opus), which provides investment advisory services to affiliates.

About Employers

Employers Holdings, Inc. is a holding company. Through its insurance subsidiaries, the Company provides workers’ compensation insurance coverage to select, small businesses in low to medium hazard industries. It provides workers’ compensation insurance under a statutory system wherein employers are required to provide coverage for their employees’ medical, disability, vocational rehabilitation, and/or death benefit costs for work-related injuries or illnesses. As of December 31, 2016 the Company provided workers’ compensation insurance in 36 states and the District of Columbia, with a concentration in California. Its insurance subsidiaries include Employers Insurance Company of Nevada (EICN), Employers Compensation Insurance Company (ECIC), Employers Preferred Insurance Company (EPIC) and Employers Assurance Company (EAC). The Company’s insurance products are jointly offered and marketed with and through its partners and alliances.

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