Critical Analysis: eHealth (NASDAQ:EHTH) & Mercury General (NYSE:MCY)

Mercury General (NYSE:MCY) and eHealth (NASDAQ:EHTH) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their profitability, dividends, analyst recommendations, earnings, risk, valuation and institutional ownership.

Risk & Volatility

Mercury General has a beta of 0.89, suggesting that its share price is 11% less volatile than the S&P 500. Comparatively, eHealth has a beta of 1.63, suggesting that its share price is 63% more volatile than the S&P 500.

Insider & Institutional Ownership

42.4% of Mercury General shares are held by institutional investors. Comparatively, 79.5% of eHealth shares are held by institutional investors. 35.5% of Mercury General shares are held by company insiders. Comparatively, 7.2% of eHealth shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Mercury General and eHealth”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mercury General	$5.99 billion	0.95	$541.09 million	$16.92	6.07
eHealth	$554.01 million	0.04	$40.04 million	($1.16)	-0.60

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

Profitability

This table compares Mercury General and eHealth’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Mercury General	14.77%	31.98%	8.19%
eHealth	5.42%	6.13%	2.92%

Analyst Recommendations

This is a summary of recent recommendations for Mercury General and eHealth, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mercury General	0	0	1	1	3.50
eHealth	1	5	0	0	1.83

eHealth has a consensus price target of $2.19, suggesting a potential upside of 212.50%. Given eHealth’s higher probable upside, analysts plainly believe eHealth is more favorable than Mercury General.

Summary

Mercury General beats eHealth on 12 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, and umbrella insurance products. Its automobile insurance products include collision, property damage, bodily injury, comprehensive, personal injury protection, underinsured and uninsured motorist, and other hazards; and homeowners insurance products comprise dwelling, liability, personal property, and other coverages. The company sells its policies through a network of independent agents, insurance agencies, as well as directly through internet sales portals 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.

About eHealth

eHealth, Inc. operates a health insurance marketplace that provides consumer engagement, education, and health insurance enrollment solutions in the United States. The company operates in two segments, Medicare; and Employer and Individual. The Medicare segment offers sale of Medicare-related health insurance plans, which includes Medicare advantage, Medicare Supplement, and Medicare Part D prescription drug plans to Medicare-eligible customers including but not limited to, dental, and vision insurance, as well as advertising program for marketing and other services. The Employer and Individual segment engages in the sale of individual, family, and small business health insurance plans; and ancillary products to non-Medicare-eligible customers including but not limited to, dental, vision, and short and long term disability insurance. In addition, the company provides ecommerce platforms and consumer engagement solutions, which includes market leading information, decision support, customer engagement, and transactional services to group of health insurance consumers; and organize and present the insurance information in objective format to individuals, families, and small businesses to research, analyze, compare and purchase health insurance plans. Further, it markets health insurance plans through its websites, including eHealth.com, eHealthInsurance.com, eHealthMedicare.com, Medicare.com, PlanPrescriber.com, and GoMedigap.com. The company also offers online sponsorship and advertising, non-broker of record, lead referral, technology licensing, as well as performs various post-enrollment services for members in Medicare health insurance plans. eHealth, Inc. was incorporated in 1997 and is headquartered in Austin, Texas.