Head to Head Contrast: Erie Indemnity (ERIE) versus Allstate (ALL)

Erie Indemnity (NASDAQ: ERIE) and Allstate (NYSE:ALL) are both mid-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their valuation, analyst recommendations, risk, earnings, institutional ownership, profitability and dividends.

Volatility and Risk

Erie Indemnity has a beta of 0.47, meaning that its share price is 53% less volatile than the S&P 500. Comparatively, Allstate has a beta of 1.12, meaning that its share price is 12% more volatile than the S&P 500.

Dividends

Erie Indemnity pays an annual dividend of $3.36 per share and has a dividend yield of 2.9%. Allstate pays an annual dividend of $1.48 per share and has a dividend yield of 1.4%. Erie Indemnity pays out 83.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Allstate pays out 20.6% of its earnings in the form of a dividend. Erie Indemnity has raised its dividend for 22 consecutive years and Allstate has raised its dividend for 7 consecutive years. Erie Indemnity is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

31.2% of Erie Indemnity shares are held by institutional investors. Comparatively, 76.6% of Allstate shares are held by institutional investors. 46.8% of Erie Indemnity shares are held by insiders. Comparatively, 1.5% of Allstate shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Erie Indemnity and Allstate’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Erie Indemnity 12.62% 24.98% 13.51%
Allstate 7.32% 13.11% 2.32%

Valuation and Earnings

This table compares Erie Indemnity and Allstate’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Erie Indemnity $1.60 billion 3.41 $210.36 million $4.02 29.29
Allstate $36.53 billion 1.03 $1.88 billion $7.20 14.50

Allstate has higher revenue and earnings than Erie Indemnity. Allstate is trading at a lower price-to-earnings ratio than Erie Indemnity, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current recommendations for Erie Indemnity and Allstate, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Erie Indemnity 0 0 0 0 N/A
Allstate 2 7 3 0 2.08

Allstate has a consensus target price of $94.50, indicating a potential downside of 9.51%. Given Allstate’s higher probable upside, analysts clearly believe Allstate is more favorable than Erie Indemnity.

Erie Indemnity Company Profile

Erie Indemnity Company is a management company. The Company serves as the attorney-in-fact for the subscribers (policyholders) at the Erie Insurance Exchange (Exchange). The Exchange is a reciprocal insurer that writes property and casualty insurance. The Company’s function is to perform certain services for the Exchange relating to the sales, underwriting and issuance of policies on behalf of the Exchange. The sales related services the Company provides include agent compensation, and certain sales and advertising support services. Agent compensation includes scheduled commissions to agents based upon premiums written, as well as additional commissions and bonuses to agents. The underwriting services the Company provides include underwriting and policy processing expenses. It provides information technology services that supports various functions. The remaining services the Company provides include customer service and administrative costs.

Allstate Company Profile

The Allstate Corporation (Allstate) is a holding company for Allstate Insurance Company. The Company’s business is conducted principally through Allstate Insurance Company, Allstate Life Insurance Company and other subsidiaries. It is engaged in the property-liability insurance business and the life insurance, retirement and investment products business. Its segments include Allstate Protection, Allstate Financial, Discontinued Lines and Coverages, and Corporate and Other. The Allstate Protection segment sells private passenger auto, homeowners, and other property-liability insurance products through agencies and directly through contact centers and the Internet. The Allstate Financial segment sells life insurance and voluntary accident and health insurance products. The Corporate and Other segment consists of holding company activities and certain non-insurance operations. Its Discontinued Lines and Coverages segment includes results from property-liability insurance coverage.

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