United Fire Group (NASDAQ: UFCS) and RLI (NYSE:RLI) are both financials companies, but which is the better business? We will contrast the two companies based on the strength of their risk, analyst recommendations, institutional ownership, valuation, profitability, earnings and dividends.
Volatility and Risk
United Fire Group has a beta of 0.55, meaning that its share price is 45% less volatile than the S&P 500. Comparatively, RLI has a beta of 1.29, meaning that its share price is 29% more volatile than the S&P 500.
This table compares United Fire Group and RLI’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|United Fire Group||$1.05 billion||1.14||$51.02 million||$1.66||29.01|
|RLI||$797.22 million||3.54||$105.02 million||$1.62||39.39|
RLI has lower revenue, but higher earnings than United Fire Group. United Fire Group is trading at a lower price-to-earnings ratio than RLI, indicating that it is currently the more affordable of the two stocks.
United Fire Group pays an annual dividend of $1.12 per share and has a dividend yield of 2.3%. RLI pays an annual dividend of $0.84 per share and has a dividend yield of 1.3%. United Fire Group pays out 67.5% of its earnings in the form of a dividend. RLI pays out 51.9% 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. RLI has increased its dividend for 41 consecutive years.
This table compares United Fire Group and RLI’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|United Fire Group||4.58%||2.42%||0.56%|
Insider & Institutional Ownership
61.9% of United Fire Group shares are held by institutional investors. Comparatively, 87.0% of RLI shares are held by institutional investors. 5.8% of United Fire Group shares are held by insiders. Comparatively, 6.1% of RLI shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
This is a summary of current recommendations for United Fire Group and RLI, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|United Fire Group||0||1||2||0||2.67|
United Fire Group currently has a consensus target price of $46.33, suggesting a potential downside of 3.79%. RLI has a consensus target price of $53.00, suggesting a potential downside of 16.94%. Given United Fire Group’s stronger consensus rating and higher probable upside, analysts plainly believe United Fire Group is more favorable than RLI.
RLI beats United Fire Group on 11 of the 17 factors compared between the two stocks.
United Fire Group Company Profile
United Fire Group, Inc., formerly United Fire & Casualty Company, is engaged in the business of writing property and casualty insurance and life insurance and selling annuities. The Company operates in two segments: property and casualty insurance, and life insurance. The Company’s property and casualty insurance segment consists of commercial lines insurance, including surety bonds, personal lines insurance and assumed insurance. Its life insurance segment consists of deferred and immediate annuities, universal life insurance products and traditional life insurance products. Its life insurance segment consists solely of the operations of United Life Insurance Company. On February 1, 2012, the Company completed a holding company reorganization of United Fire Group, Inc., United Fire & Casualty Company and UFC MergeCo, Inc. On March 28, 2011, the Company acquired Mercer Insurance Group, Inc. (Mercer Insurance Group).
RLI Company Profile
RLI Corp. is a specialty insurance company. The Company underwrites selected property and casualty insurance through subsidiaries, as well as offers insurance coverages in both the specialty admitted, and excess and surplus markets. It operates through Casualty, Property and Surety segments. Its Casualty segment consists of commercial and personal umbrella, general liability, commercial transportation, professional services, small commercial, executive products, medical professional liability and other casualty businesses. Its property segment consists of commercial property, marine, specialty personal, property reinsurance and crop reinsurance businesses. Its surety segment consists of miscellaneous, commercial, contract and energy businesses. The Company conducts its operations principally through three insurance companies: RLI Insurance Company (RLI Ins.), Mt. Hawley Insurance Company (Mt. Hawley) and Contractors Bonding and Insurance Company (CBIC).
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