HCI Group (HCI) & W. R. Berkley (WRB) Critical Analysis

HCI Group (NYSE: HCI) and W. R. Berkley (NYSE:WRB) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their institutional ownership, profitability, dividends, valuation, earnings, risk and analyst recommendations.

Institutional & Insider Ownership

76.3% of HCI Group shares are held by institutional investors. Comparatively, 70.4% of W. R. Berkley shares are held by institutional investors. 20.4% of HCI Group shares are held by insiders. Comparatively, 22.1% of W. R. Berkley shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current recommendations for HCI Group and W. R. Berkley, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
HCI Group 0 1 2 0 2.67
W. R. Berkley 0 7 0 0 2.00

HCI Group currently has a consensus price target of $43.33, suggesting a potential upside of 24.34%. W. R. Berkley has a consensus price target of $69.67, suggesting a potential upside of 2.42%. Given HCI Group’s stronger consensus rating and higher probable upside, research analysts plainly believe HCI Group is more favorable than W. R. Berkley.

Dividends

HCI Group pays an annual dividend of $1.40 per share and has a dividend yield of 4.0%. W. R. Berkley pays an annual dividend of $0.56 per share and has a dividend yield of 0.8%. HCI Group pays out -74.1% of its earnings in the form of a dividend. W. R. Berkley pays out 13.1% 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. HCI Group has raised its dividend for 4 consecutive years and W. R. Berkley has raised its dividend for 8 consecutive years. HCI Group is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

HCI Group has a beta of 2.25, meaning that its share price is 125% more volatile than the S&P 500. Comparatively, W. R. Berkley has a beta of 0.84, meaning that its share price is 16% less volatile than the S&P 500.

Valuation & Earnings

This table compares HCI Group and W. R. Berkley’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
HCI Group $264.45 million 1.29 $29.02 million ($1.89) -18.44
W. R. Berkley $7.68 billion 1.08 $549.09 million $4.27 15.93

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

Profitability

This table compares HCI Group and W. R. Berkley’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
HCI Group -5.63% -6.34% -1.75%
W. R. Berkley 7.15% 5.93% 1.32%

Summary

W. R. Berkley beats HCI Group on 9 of the 17 factors compared between the two stocks.

HCI Group Company Profile

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.

W. R. Berkley Company Profile

W. R. Berkley Corporation is an insurance holding company. It operates through two segments: Insurance and Reinsurance-Global. The Insurance segment consists of its commercial insurance business operations, comprising excess and surplus lines, and admitted lines, throughout the United States, as well as its insurance business operations in the United Kingdom, Continental Europe, South America, Canada, Mexico, Scandinavia, Asia and Australia. Its Insurance segment comprises business units, such as Acadia Insurance, American Mining Insurance Group, Berkley Accident and Health, Berkley Agribusiness Risk Specialists, Berkley Aviation and Berkley Canada. Reinsurance consists of its reinsurance business on a facultative and treaty basis, in the United States, the United Kingdom, Continental Europe, Australia, the Asia-Pacific region and South Africa. Its Reinsurance segment comprises business units, such as Berkley Re America, Berkley Re Asia Pacific, Berkley Re Direct and Berkley Re UK.

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