Financial Survey: Heritage Insurance (HRTG) & Alleghany (NYSE:Y)

Alleghany (NYSE: Y) and Heritage Insurance (NYSE:HRTG) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, earnings, dividends, risk, valuation, analyst recommendations and institutional ownership.

Profitability

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

Net Margins Return on Equity Return on Assets
Alleghany 1.74% 1.12% 0.37%
Heritage Insurance 1.84% 12.00% 2.70%



Insider and Institutional Ownership

82.0% of Alleghany shares are held by institutional investors. Comparatively, 79.6% of Heritage Insurance shares are held by institutional investors. 4.0% of Alleghany shares are held by insiders. Comparatively, 25.3% of Heritage Insurance shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Alleghany and Heritage Insurance’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Alleghany $6.42 billion 1.40 $90.13 million $2.04 287.91
Heritage Insurance $406.62 million 1.04 -$1.11 million $1.53 10.45

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

Dividends

Heritage Insurance pays an annual dividend of $0.24 per share and has a dividend yield of 1.5%. Alleghany does not pay a dividend. Heritage Insurance pays out 15.7% of its earnings in the form of a dividend.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Alleghany and Heritage Insurance, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alleghany 0 1 1 0 2.50
Heritage Insurance 0 1 3 0 2.75

Alleghany presently has a consensus target price of $650.00, suggesting a potential upside of 10.67%. Heritage Insurance has a consensus target price of $21.00, suggesting a potential upside of 31.33%. Given Heritage Insurance’s stronger consensus rating and higher probable upside, analysts clearly believe Heritage Insurance is more favorable than Alleghany.

Volatility and Risk

Alleghany has a beta of 0.9, meaning that its share price is 10% less volatile than the S&P 500. Comparatively, Heritage Insurance has a beta of 1.33, meaning that its share price is 33% more volatile than the S&P 500.

Summary

Heritage Insurance beats Alleghany on 9 of the 16 factors compared between the two stocks.

Alleghany Company Profile

Alleghany Corporation provides property and casualty reinsurance and insurance products in the United States and internationally. The company operates in two segments, Reinsurance and Insurance. The Reinsurance segment offers property reinsurance products, including fire, allied lines, auto physical damage, and homeowners multiple peril reinsurance products; and casualty and other reinsurance products, such as liability, medical malpractice, ocean marine and aviation, auto liability, accident and health, surety, and credit reinsurance products. This segment distributes its products and services through brokers, as well as directly to insurance and reinsurance companies. The Insurance segment underwrites specialty insurance coverages in the property, as well as umbrella/excess, general, management, and professional liability lines; and surety products comprising commercial and contract surety bonds, as well as workers' compensation insurance products. This segment distributes its products through independent wholesale insurance brokers, and retail and general insurance agents. The company also explores for and produces oil and gas; manufactures custom trailers and truck bodies for the moving and storage industry, and other markets; provides technical engineering services for pharmaceutical and biotechnology industries; and owns and manages improved and unimproved commercial land, and residential lots. In addition, it operates as a toy, and entertainment and musical instrument company; manufacturer/remanufacturer of specialty machine tools, as well as supplier of replacement parts, accessories, and services for various cutting technologies; structural steel fabricator and erector; and provider of products and services for the funeral and cemetery industries, and precast concrete markets. As of December 31, 2017, the company owned approximately 226 acres of property. Alleghany Corporation was founded in 1929 and is based in New York, New York.

Heritage Insurance Company Profile

Heritage Insurance Holdings, Inc., through its subsidiaries, provides personal and commercial residential insurance products. The company offers personal residential property insurance for single-family homeowners and condominium owners; rental property insurance; and commercial residential insurance, as well as residential wind-only property insurance in Alabama, Connecticut, Florida, Georgia, Hawaii, Massachusetts, New York, New Jersey, North Carolina, Rhode Island, and South Carolina. As of December 31, 2017, it had approximately 521,350 personal residential policies and 3,100 commercial residential policies. The company markets and writes its voluntary personal line policies through a network of retail independent agents, wholesale agents, and a partnership with a direct agency, as well as indirectly to approximately 1,500 retail locations through 8 wholesale agency relationships. It also provides restoration, and emergency and recovery services; and property management, retail agency, and reinsurance services. The company was founded in 2012 and is headquartered in Clearwater, Florida.

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