Head-To-Head Comparison: RLI (RLI) and Universal Insurance (UVE)

RLI (NYSE: RLI) and Universal Insurance (NYSE:UVE) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, earnings, analyst recommendations, valuation, risk, dividends and institutional ownership.

Profitability

This table compares RLI and Universal Insurance’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
RLI 13.17% 8.21% 2.46%
Universal Insurance 11.55% 20.90% 6.30%

Valuation & Earnings

This table compares RLI and Universal Insurance’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
RLI $797.22 million 3.52 $105.02 million $2.37 26.86
Universal Insurance $685.29 million 1.47 $99.41 million $2.34 12.48

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

Insider and Institutional Ownership

83.7% of RLI shares are owned by institutional investors. Comparatively, 78.1% of Universal Insurance shares are owned by institutional investors. 6.1% of RLI shares are owned by company insiders. Comparatively, 10.5% of Universal Insurance shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for RLI and Universal Insurance, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
RLI 1 3 0 0 1.75
Universal Insurance 0 0 1 0 3.00

RLI presently has a consensus price target of $53.00, suggesting a potential downside of 16.73%. Universal Insurance has a consensus price target of $32.00, suggesting a potential upside of 9.59%. Given Universal Insurance’s stronger consensus rating and higher possible upside, analysts clearly believe Universal Insurance is more favorable than RLI.

Volatility and Risk

RLI has a beta of 1.26, suggesting that its share price is 26% more volatile than the S&P 500. Comparatively, Universal Insurance has a beta of 1.9, suggesting that its share price is 90% more volatile than the S&P 500.

Dividends

RLI pays an annual dividend of $0.84 per share and has a dividend yield of 1.3%. Universal Insurance pays an annual dividend of $0.56 per share and has a dividend yield of 1.9%. RLI pays out 35.4% of its earnings in the form of a dividend. Universal Insurance pays out 23.9% 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. RLI has raised its dividend for 41 consecutive years. Universal Insurance is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Universal Insurance beats RLI on 9 of the 17 factors compared between the two stocks.

RLI Company Profile

RLI Corp. is a specialty insurance company. The Company underwrites selected property and casualty insurance through subsidiaries, as well as offers insurance coverages in both the specialty admitted, and excess and surplus markets. It operates through Casualty, Property and Surety segments. Its Casualty segment consists of commercial and personal umbrella, general liability, commercial transportation, professional services, small commercial, executive products, medical professional liability and other casualty businesses. Its property segment consists of commercial property, marine, specialty personal, property reinsurance and crop reinsurance businesses. Its surety segment consists of miscellaneous, commercial, contract and energy businesses. The Company conducts its operations principally through three insurance companies: RLI Insurance Company (RLI Ins.), Mt. Hawley Insurance Company (Mt. Hawley) and Contractors Bonding and Insurance Company (CBIC).

Universal Insurance Company Profile

Universal Insurance Holdings, Inc. (UVE) is a private personal residential homeowners insurance company in Florida. The Company performs substantially all aspects of insurance underwriting, policy issuance, general administration, and claims processing and settlement internally. The Company’s subsidiaries include Universal Property & Casualty Insurance Company (UPCIC) and American Platinum Property and Casualty Insurance Company (APPCIC). UPCIC writes homeowners insurance policies in states, including Alabama, Delaware, Florida, Georgia, Hawaii, Indiana, Maryland, Massachusetts, Michigan, Minnesota, North Carolina, Pennsylvania, South Carolina and Virginia. APPCIC writes homeowners and commercial residential insurance policies in Florida. The Company has developed a suite of applications that provide underwriting, policy and claim administration services, including billing, policy maintenance, inspections, refunds, commissions and data analysis.

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