Mercury General (NYSE:MCY) and RLI (NYSE:RLI) are both mid-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, valuation, risk, profitability, analyst recommendations, earnings and institutional ownership.
Insider and Institutional Ownership
42.5% of Mercury General shares are owned by institutional investors. Comparatively, 87.2% of RLI shares are owned by institutional investors. 34.2% of Mercury General shares are owned by company insiders. Comparatively, 5.0% of RLI shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Earnings and Valuation
This table compares Mercury General and RLI’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Mercury General||$3.38 billion||0.80||-$5.72 million||$1.80||27.04|
|RLI||$818.12 million||5.40||$64.18 million||$2.05||48.05|
RLI has lower revenue, but higher earnings than Mercury General. Mercury General is trading at a lower price-to-earnings ratio than RLI, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
Mercury General has a beta of 0.21, suggesting that its stock price is 79% less volatile than the S&P 500. Comparatively, RLI has a beta of 0.73, suggesting that its stock price is 27% less volatile than the S&P 500.
This table compares Mercury General and RLI’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Mercury General pays an annual dividend of $2.51 per share and has a dividend yield of 5.2%. RLI pays an annual dividend of $0.92 per share and has a dividend yield of 0.9%. Mercury General pays out 139.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. RLI pays out 44.9% of its earnings in the form of a dividend.
This is a breakdown of current ratings and recommmendations for Mercury General and RLI, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Mercury General currently has a consensus price target of $50.00, indicating a potential upside of 2.73%. RLI has a consensus price target of $77.00, indicating a potential downside of 21.83%. Given Mercury General’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Mercury General is more favorable than RLI.
RLI beats Mercury General on 10 of the 15 factors compared between the two stocks.
About Mercury General
Mercury General Corporation, together with its subsidiaries, engages in writing personal automobile insurance in the United States. The company also writes homeowners, commercial automobile, commercial property, mechanical protection, fire, and umbrella insurance. Its automobile insurance products cover collision, property damage, bodily injury, comprehensive, personal injury protection, underinsured and uninsured motorist, and other hazards; and homeowners' insurance products cover dwelling, liability, personal property, fire, and other hazards. The company sells its policies through a network of independent agents, 100% owned insurance agents, and direct channels in Arizona, California, Florida, Georgia, Illinois, Nevada, New Jersey, New York, Oklahoma, Texas, and Virginia. Mercury General Corporation was founded in 1961 and is headquartered in Los Angeles, California.
RLI Corp., an insurance holding company, underwrites property and casualty insurance in the United States and internationally. Its Casualty segment provides commercial and personal coverage products; and general liability products, such as coverage for third-party liability of commercial insureds, including manufacturers, contractors, apartments, and mercantile. This segment also offers coverages for security guards and in the areas of onshore energy-related businesses and environmental liability for underground storage tanks, contractors and asbestos, and environmental remediation specialists; and professional liability coverages focuses on providing errors and omission coverage to small to medium-sized design, technical, computer, and miscellaneous professionals. In addition, this segment provides commercial automobile liability and physical damage insurance to local, intermediate and long haul truckers, public transportation entities, and equipment dealers; incidental and related insurance coverages; inland marine coverages; management liability coverages, such as directors and officers liability insurance, fiduciary liability and fidelity coverages, and for low to moderate classes of risks, including public and private businesses; and healthcare liability and home business insurance products. The company's Property segment offers commercial property, cargo, hull, protection and indemnity, marine liability, inland marine, homeowners' and dwelling fire, and other property insurance products. Its Surety segment offers small bonds for businesses and individuals; bonds for small to medium-sized contractors; commercial surety bonds for medium-to-large businesses; and commercial surety bonds for the energy, petrochemical, and refining industries. The company also underwrites various reinsurance coverages. The company markets its products through branch offices and independent agents. RLI Corp. was founded in 1965 and is headquartered in Peoria, Illinois.
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