Analyzing Universal Insurance (UVE) and Heritage Insurance (HRTG)

Universal Insurance (NYSE: UVE) and Heritage Insurance (NYSE:HRTG) are both small-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, valuation, risk, dividends, earnings, analyst recommendations and institutional ownership.

Earnings and Valuation

This table compares Universal Insurance and Heritage Insurance’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Universal Insurance $685.29 million 1.49 $99.41 million $2.34 12.67
Heritage Insurance $438.96 million 1.03 $33.86 million $0.01 1,707.71

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

Dividends

Universal Insurance pays an annual dividend of $0.56 per share and has a dividend yield of 1.9%. Heritage Insurance pays an annual dividend of $0.24 per share and has a dividend yield of 1.4%. Universal Insurance pays out 23.9% of its earnings in the form of a dividend. Heritage Insurance pays out 2,402.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Universal Insurance is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

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

Net Margins Return on Equity Return on Assets
Universal Insurance 11.55% 20.90% 6.30%
Heritage Insurance 0.27% 0.31% 0.09%

Institutional and Insider Ownership

78.2% of Universal Insurance shares are owned by institutional investors. Comparatively, 84.1% of Heritage Insurance shares are owned by institutional investors. 10.5% of Universal Insurance shares are owned by insiders. Comparatively, 16.1% of Heritage Insurance shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Risk & Volatility

Universal Insurance has a beta of 1.9, meaning that its share price is 90% more volatile than the S&P 500. Comparatively, Heritage Insurance has a beta of 1.3, meaning that its share price is 30% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations for Universal Insurance and Heritage Insurance, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Universal Insurance 0 0 1 0 3.00
Heritage Insurance 0 1 3 0 2.75

Universal Insurance presently has a consensus target price of $32.00, indicating a potential upside of 7.93%. Heritage Insurance has a consensus target price of $18.50, indicating a potential upside of 8.44%. Given Heritage Insurance’s higher possible upside, analysts clearly believe Heritage Insurance is more favorable than Universal Insurance.

Summary

Universal Insurance beats Heritage Insurance on 11 of the 16 factors compared between the two stocks.

About Universal Insurance

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.

About Heritage Insurance

Heritage Insurance Holdings, Inc. (Heritage Insurance) is a property and casualty insurance holding company. The Company provides personal and commercial residential insurance. Through its subsidiary, Heritage Property & Casualty Insurance Company (Heritage P&C), it provides personal residential insurance for single-family homeowners and condominium owners, rental property insurance and commercial residential insurance in the state of Florida and North Carolina. The Company is vertically integrated and controls or manages all aspects of insurance underwriting, customer service, actuarial analysis, distribution and claims processing and adjusting. The Company’s primary products are personal and commercial residential insurance, which it offers only in Florida. As of December 31, 2016, it marketed and wrote personal lines voluntary policies through a network of approximately 1,900 independent agents. It had 150,998 voluntary personal residential policies as of December 31, 2016.

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