Erie Indemnity (NASDAQ: ERIE) and ProAssurance (NYSE:PRA) are both mid-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their risk, institutional ownership, earnings, profitability, dividends, valuation and analyst recommendations.
Valuation & Earnings
This table compares Erie Indemnity and ProAssurance’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Erie Indemnity||$1.69 billion||3.23||$196.99 million||$3.76||31.47|
|ProAssurance||$866.15 million||3.09||$107.26 million||$1.99||25.15|
Volatility and Risk
Erie Indemnity has a beta of 0.44, meaning that its stock price is 56% less volatile than the S&P 500. Comparatively, ProAssurance has a beta of 0.59, meaning that its stock price is 41% less volatile than the S&P 500.
Institutional & Insider Ownership
31.0% of Erie Indemnity shares are owned by institutional investors. Comparatively, 82.6% of ProAssurance shares are owned by institutional investors. 46.8% of Erie Indemnity shares are owned by company insiders. Comparatively, 1.8% of ProAssurance shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
This is a summary of current recommendations and price targets for Erie Indemnity and ProAssurance, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
ProAssurance has a consensus target price of $54.50, suggesting a potential upside of 8.89%. Given ProAssurance’s higher probable upside, analysts clearly believe ProAssurance is more favorable than Erie Indemnity.
Erie Indemnity pays an annual dividend of $3.36 per share and has a dividend yield of 2.8%. ProAssurance pays an annual dividend of $1.24 per share and has a dividend yield of 2.5%. Erie Indemnity pays out 89.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. ProAssurance pays out 62.3% of its earnings in the form of a dividend. ProAssurance has raised its dividend for 22 consecutive years.
This table compares Erie Indemnity and ProAssurance’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Erie Indemnity beats ProAssurance on 9 of the 15 factors compared between the two stocks.
Erie Indemnity Company Profile
Erie Indemnity Company is a management company. The Company serves as the attorney-in-fact for the subscribers (policyholders) at the Erie Insurance Exchange (Exchange). The Exchange is a reciprocal insurer that writes property and casualty insurance. The Company’s function is to perform certain services for the Exchange relating to the sales, underwriting and issuance of policies on behalf of the Exchange. The sales related services the Company provides include agent compensation, and certain sales and advertising support services. Agent compensation includes scheduled commissions to agents based upon premiums written, as well as additional commissions and bonuses to agents. The underwriting services the Company provides include underwriting and policy processing expenses. It provides information technology services that supports various functions. The remaining services the Company provides include customer service and administrative costs.
ProAssurance Company Profile
ProAssurance Corporation (ProAssurance) is a holding company for property and casualty insurance companies. The Company provides professional liability insurance for healthcare professionals and facilities, professional liability insurance for attorneys, liability insurance for medical technology and life sciences risks, and workers’ compensation insurance. The Company operates through four segments. The Specialty property and casualty segment includes the Company’s professional liability business, and medical technology and life sciences business. The Workers’ compensation segment includes its workers’ compensation business. Lloyd’s Syndicate 1729 (Syndicate 1729) segment includes business of Syndicate 1729, which underwrites risks over a range of property and casualty insurance and reinsurance lines. The Corporate segment includes the Company’s investment operations managed at the corporate level and non-premium revenues generated outside of its insurance entities.
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