Head to Head Contrast: Horace Mann Educators (HMN) & HCI Group (HCI)

Horace Mann Educators (NYSE: HMN) and HCI Group (NYSE:HCI) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, dividends, profitability, earnings, valuation, institutional ownership and analyst recommendations.

Institutional & Insider Ownership

98.3% of Horace Mann Educators shares are owned by institutional investors. Comparatively, 75.9% of HCI Group shares are owned by institutional investors. 2.4% of Horace Mann Educators shares are owned by insiders. Comparatively, 20.4% of HCI Group shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Horace Mann Educators and HCI Group’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Horace Mann Educators $1.13 billion 1.58 $83.76 million $1.54 28.47
HCI Group $264.45 million 1.30 $29.02 million ($1.89) -18.65

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

Profitability

This table compares Horace Mann Educators and HCI Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Horace Mann Educators 5.56% 4.94% 0.61%
HCI Group -5.63% -6.34% -1.75%

Dividends

Horace Mann Educators pays an annual dividend of $1.10 per share and has a dividend yield of 2.5%. HCI Group pays an annual dividend of $1.40 per share and has a dividend yield of 4.0%. Horace Mann Educators pays out 71.4% of its earnings in the form of a dividend. HCI Group pays out -74.1% 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. Horace Mann Educators has increased its dividend for 4 consecutive years and HCI Group has increased its dividend for 9 consecutive years. HCI Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Horace Mann Educators has a beta of 1.17, suggesting that its stock price is 17% more volatile than the S&P 500. Comparatively, HCI Group has a beta of 2.18, suggesting that its stock price is 118% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and price targets for Horace Mann Educators and HCI Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Horace Mann Educators 0 1 0 0 2.00
HCI Group 0 1 2 0 2.67

Horace Mann Educators currently has a consensus price target of $37.00, indicating a potential downside of 15.62%. HCI Group has a consensus price target of $43.33, indicating a potential upside of 22.97%. Given HCI Group’s stronger consensus rating and higher possible upside, analysts plainly believe HCI Group is more favorable than Horace Mann Educators.

Summary

Horace Mann Educators beats HCI Group on 9 of the 17 factors compared between the two stocks.

About Horace Mann Educators

Horace Mann Educators Corporation (HMEC) is an insurance holding company. Through its subsidiaries, HMEC markets and underwrites personal lines of property and casualty (primarily personal lines automobile and homeowners) insurance, retirement annuities (primarily tax-qualified products) and life insurance in the United States. The Company’s operating segments include Property and Casualty segment, comprising primarily personal lines automobile and homeowners products; Retirement segment, comprising primarily tax-qualified fixed and variable annuities; Life segment life insurance, and Corporate and Other. It markets and services its products through a sales force of full-time agents supported by its Customer Contact Center. These agents sell HMEC’s products and limited additional third-party vendor products. As of December 31, 2016, its property and casualty subsidiaries and its life insurance subsidiary were licensed to write business in over 48 states and the District of Columbia.

About HCI Group

HCI Group, Inc. (HCI) is an insurance holding company. The Company operates through four operating divisions: property and casualty insurance, reinsurance, investment real estate and information technology. Its operations include Insurance Operations and Other Operations. Its Insurance Operations include property and casualty insurance, and reinsurance. The Company, through its subsidiary, Homeowners Choice Property & Casualty Insurance Company, Inc. (HCPCI), provides property and casualty insurance to homeowners, condominium owners and tenants on properties located in Florida. HCPCI also offers flood-endorsed and wind-only policies to new and pre-existing Florida customers. Its Other Operations include information technology (IT) and real estate. The Company’s real estate operations consist of multiple properties it owns and operates.

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