Safety Insurance Group (NASDAQ: SAFT) and Mercury General Corporation (NYSE:MCY) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, valuation, dividends, institutional ownership, risk, earnings and analyst recommendations.
Institutional & Insider Ownership
78.9% of Safety Insurance Group shares are owned by institutional investors. Comparatively, 47.0% of Mercury General Corporation shares are owned by institutional investors. 4.9% of Safety Insurance Group shares are owned by company insiders. Comparatively, 34.3% of Mercury General Corporation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
Earnings & Valuation
This table compares Safety Insurance Group and Mercury General Corporation’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Safety Insurance Group||$830.06 million||1.30||$108.19 million||$4.20||16.94|
|Mercury General Corporation||$3.25 billion||0.97||$116.43 million||$1.44||39.66|
Mercury General Corporation has higher revenue and earnings than Safety Insurance Group. Safety Insurance Group is trading at a lower price-to-earnings ratio than Mercury General Corporation, indicating that it is currently the more affordable of the two stocks.
Safety Insurance Group pays an annual dividend of $3.20 per share and has a dividend yield of 4.5%. Mercury General Corporation pays an annual dividend of $2.49 per share and has a dividend yield of 4.4%. Safety Insurance Group pays out 76.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Mercury General Corporation pays out 172.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Mercury General Corporation has raised its dividend for 31 consecutive years. Safety Insurance Group is clearly the better dividend stock, given its higher yield and lower payout ratio.
Risk and Volatility
Safety Insurance Group has a beta of 0.76, indicating that its stock price is 24% less volatile than the S&P 500. Comparatively, Mercury General Corporation has a beta of 0.5, indicating that its stock price is 50% less volatile than the S&P 500.
This is a summary of current ratings for Safety Insurance Group and Mercury General Corporation, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Safety Insurance Group||0||0||0||0||N/A|
|Mercury General Corporation||0||0||0||0||N/A|
This table compares Safety Insurance Group and Mercury General Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Safety Insurance Group||7.67%||9.33%||3.57%|
|Mercury General Corporation||2.45%||6.66%||2.43%|
Safety Insurance Group beats Mercury General Corporation on 9 of the 14 factors compared between the two stocks.
About Safety Insurance Group
Safety Insurance Group, Inc. is a provider of private passenger automobile insurance. The Company offers a portfolio of property and casualty insurance products. The Company is engaged in property and casualty insurance operations. The Company’s product line includes private passenger automobile, commercial automobile, homeowners, business owners’ policies, personal umbrella, dwelling fire, commercial umbrella, inland marine and watercraft. The Company operates through its insurance company subsidiaries, Safety Insurance Company, Safety Indemnity Insurance Company, and Safety Property and Casualty Insurance Company. Private passenger automobile policies provide coverage for bodily injury and property damage to others, no-fault personal injury coverage for the insured/insured’s car occupants, and physical damage coverage for an insured’s own vehicle for collision or other perils. Commercial automobile policies provide coverage for bodily injury and property damage to others.
About Mercury General Corporation
Mercury General Corporation is an insurance holding company. As of December 31, 2016, the Company and its subsidiaries were engaged in writing personal automobile insurance through 14 insurance subsidiaries in 11 states, principally California. Its segments include Property and Casualty Lines, and Other Lines. Its Property and Casualty segment offers various insurance products to its individual customers and small business customers. Its Other segment offers automobile mechanical breakdown warranties, which are sold through automobile dealerships and credit unions. It also writes homeowners, commercial automobile, commercial property, mechanical breakdown and umbrella insurance. Its insurance policies are sold through independent agents. As of December 31, 2016, it sold its policies through approximately 9,700 independent agents, its owned insurance agencies, Auto Insurance Specialists LLC and PoliSeek AIS Insurance Solutions, Inc., and directly through Internet sales portals.
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