Head to Head Analysis: State Auto Financial (STFC) & Alterra Capital (ALTE)

State Auto Financial (NASDAQ: STFC) and Alterra Capital (NASDAQ:ALTE) are both financials companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, dividends, earnings, institutional ownership, risk and profitability.

Insider and Institutional Ownership

33.1% of State Auto Financial shares are held by institutional investors. 1.5% of State Auto Financial shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings for State Auto Financial and Alterra Capital, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
State Auto Financial 0 1 0 0 2.00
Alterra Capital 0 0 0 0 N/A

State Auto Financial currently has a consensus price target of $26.00, suggesting a potential downside of 12.22%. Given State Auto Financial’s higher possible upside, equities research analysts clearly believe State Auto Financial is more favorable than Alterra Capital.

Dividends

State Auto Financial pays an annual dividend of $0.40 per share and has a dividend yield of 1.4%. Alterra Capital does not pay a dividend. State Auto Financial pays out 61.5% of its earnings in the form of a dividend.

Earnings and Valuation

This table compares State Auto Financial and Alterra Capital’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
State Auto Financial $1.41 billion 0.89 $21.00 million $0.65 45.57
Alterra Capital N/A N/A N/A $1.65 0.55

State Auto Financial has higher revenue and earnings than Alterra Capital. Alterra Capital is trading at a lower price-to-earnings ratio than State Auto Financial, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares State Auto Financial and Alterra Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
State Auto Financial -2.65% -4.21% -1.25%
Alterra Capital N/A N/A N/A

Summary

State Auto Financial beats Alterra Capital on 6 of the 11 factors compared between the two stocks.

About State Auto Financial

State Auto Financial Corporation is a property and casualty insurance holding company. The Company is engaged in writing personal, business and specialty insurance. Its segments include Personal Insurance Segment, Commercial Insurance Segment and Specialty Insurance Segment. Its Personal Insurance Segment include personal auto, homeowners and other personal; Commercial Insurance Segment include commercial auto, small commercial package, middle market commercial, workers’ compensation and other commercial, and Specialty Insurance Segment include Excess & Surplus (E&S) property, E&S casualty and programs. State Auto Financial’s subsidiaries include State Auto Property & Casualty Insurance Company (State Auto P&C), Milbank Insurance Company (Milbank) and State Auto Insurance Company of Ohio (SA Ohio), each of which is a property and casualty insurance company, and Stateco Financial Services, Inc., (Stateco), which provides investment management services to affiliated insurance companies.

About Alterra Capital

Alterra Capital Holdings Limited (Alterra) is engaged in providing diversified specialty insurance and reinsurance products to corporations, public entities and property and casualty insurers. In Bermuda, the Company conducts its insurance and reinsurance operations through Alterra Bermuda. In Europe, the Company conducts its non-Lloyd’s operations primarily from Dublin, Ireland through Alterra Europe. In the United States, the Company’s U.S. reinsurance operations are conducted through Alterra Re USA, a Connecticut-domiciled reinsurance company. The Company’s U.S. insurance operations are conducted through Alterra E&S. In Latin America, the Company provides reinsurance to clients through Alterra at Lloyd’s in Rio de Janeiro, Brazil, using Lloyd’s admitted status, through Alterra Europe. In June 2012, the Company formed New Point V Limited. On May 1, 2013, Alterra Capital was acquired by Markel Corporation.

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