Analyzing Kinsale Capital Group (KNSL) & HCI Group (HCI)

Kinsale Capital Group (NASDAQ: KNSL) and HCI Group (NYSE:HCI) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, risk, profitability, dividends, valuation, analyst recommendations and institutional ownership.

Institutional & Insider Ownership

82.0% of Kinsale Capital Group shares are owned by institutional investors. Comparatively, 76.9% of HCI Group shares are owned by institutional investors. 11.2% of Kinsale Capital Group shares are owned by company insiders. Comparatively, 20.4% of HCI Group shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Kinsale Capital Group and HCI Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Kinsale Capital Group 14.65% 11.69% 4.14%
HCI Group -5.63% -6.34% -1.75%

Dividends

Kinsale Capital Group pays an annual dividend of $0.24 per share and has a dividend yield of 0.5%. HCI Group pays an annual dividend of $1.40 per share and has a dividend yield of 4.1%. Kinsale Capital Group pays out 19.8% 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. Kinsale Capital Group has increased its dividend for 4 consecutive years. HCI Group is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of recent recommendations for Kinsale Capital Group and HCI Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kinsale Capital Group 0 1 2 0 2.67
HCI Group 0 1 2 0 2.67

Kinsale Capital Group presently has a consensus price target of $45.50, suggesting a potential downside of 0.44%. HCI Group has a consensus price target of $43.33, suggesting a potential upside of 27.15%. Given HCI Group’s higher probable upside, analysts clearly believe HCI Group is more favorable than Kinsale Capital Group.

Risk and Volatility

Kinsale Capital Group has a beta of -0.13, suggesting that its share price is 113% less volatile than the S&P 500. Comparatively, HCI Group has a beta of 2.25, suggesting that its share price is 125% more volatile than the S&P 500.

Valuation and Earnings

This table compares Kinsale Capital Group and HCI Group’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Kinsale Capital Group $141.62 million 6.79 $26.16 million $1.21 37.77
HCI Group $264.45 million 1.26 $29.02 million ($1.89) -18.03

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

Summary

Kinsale Capital Group beats HCI Group on 8 of the 15 factors compared between the two stocks.

Kinsale Capital Group Company Profile

Kinsale Capital Group, Inc. is a specialty insurance company. The Company focuses on the excess and surplus lines (E&S) market in the United States. The Company operates through the Excess and Surplus Lines Insurance segment. The Company markets and sells these insurance products in approximately 50 states and the District of Columbia through a network of independent insurance brokers. The Company’s commercial lines offerings include construction, small business, excess casualty, general casualty, energy, professional liability, life sciences, product liability, allied health, healthcare, commercial property, management liability, environmental, inland marine, commercial insurance and public entity. The Company writes an array of coverages with a focus on smaller commercial buyers. The Company also writes a small amount of homeowners insurance in the personal lines market. The Company’s subsidiaries include Kinsale Management, Inc. and Kinsale Insurance Company.

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.

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