Employers (NYSE: EIG) and Cna Financial (NYSE:CNA) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, valuation, profitability, earnings, risk and analyst recommendations.
Institutional & Insider Ownership
77.4% of Employers shares are held by institutional investors. Comparatively, 99.7% of Cna Financial shares are held by institutional investors. 3.5% of Employers shares are held by insiders. Comparatively, 0.5% of Cna Financial shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
This is a summary of recent recommendations for Employers and Cna Financial, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Employers presently has a consensus price target of $44.50, indicating a potential upside of 1.71%. Cna Financial has a consensus price target of $50.50, indicating a potential downside of 6.41%. Given Employers’ higher possible upside, equities research analysts plainly believe Employers is more favorable than Cna Financial.
This table compares Employers and Cna Financial’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Earnings and Valuation
This table compares Employers and Cna Financial’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Employers||$779.80 million||1.82||$106.70 million||$3.19||13.71|
|Cna Financial||$9.37 billion||1.56||$859.00 million||$3.38||15.96|
Cna Financial has higher revenue and earnings than Employers. Employers is trading at a lower price-to-earnings ratio than Cna Financial, indicating that it is currently the more affordable of the two stocks.
Employers pays an annual dividend of $0.60 per share and has a dividend yield of 1.4%. Cna Financial pays an annual dividend of $1.20 per share and has a dividend yield of 2.2%. Employers pays out 18.8% of its earnings in the form of a dividend. Cna Financial pays out 35.5% 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. Cna Financial has increased its dividend for 2 consecutive years. Cna Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Volatility and Risk
Employers has a beta of 1.14, meaning that its share price is 14% more volatile than the S&P 500. Comparatively, Cna Financial has a beta of 1.32, meaning that its share price is 32% more volatile than the S&P 500.
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.
About Cna Financial
CNA Financial Corporation is an insurance holding company. The Company’s segments include Specialty, Commercial, International, Life & Group Non-Core, and Corporate & Other Non-Core. Its Specialty segment provides a range of professional, financial, and specialty property, and casualty products and services. The Commercial segment includes property and casualty insurance products and services to small, middle-market and large businesses. Its International segment provides management and professional liability coverages, as well as a range of other property and casualty insurance products and services. The Life & Group Non-Core segment primarily includes the results of its individual and group long term care businesses that are in run-off. Its Corporate & Other Non-Core segment primarily includes certain corporate expenses, including interest on corporate debt, and the results of certain property and casualty business in run-off.
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