Infinity Property and Casualty Corporation (NASDAQ: IPCC) and Mercury General Corporation (NYSE:MCY) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, risk, analyst recommendations, profitability, institutional ownership, valuation and earnings.

Analyst Ratings

This is a breakdown of current ratings and target prices for Infinity Property and Casualty Corporation and Mercury General Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Infinity Property and Casualty Corporation 0 1 1 0 2.50
Mercury General Corporation 0 0 0 0 N/A

Infinity Property and Casualty Corporation presently has a consensus target price of $99.50, indicating a potential upside of 8.86%. Given Infinity Property and Casualty Corporation’s higher possible upside, equities research analysts clearly believe Infinity Property and Casualty Corporation is more favorable than Mercury General Corporation.

Earnings & Valuation

This table compares Infinity Property and Casualty Corporation and Mercury General Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Infinity Property and Casualty Corporation $1.55 billion 0.65 $108.88 million $3.62 25.25
Mercury General Corporation $3.25 billion 0.99 $116.43 million $1.44 40.42

Mercury General Corporation has higher revenue and earnings than Infinity Property and Casualty Corporation. Infinity Property and Casualty Corporation 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.

Dividends

Infinity Property and Casualty Corporation pays an annual dividend of $2.32 per share and has a dividend yield of 2.5%. Mercury General Corporation pays an annual dividend of $2.49 per share and has a dividend yield of 4.3%. Infinity Property and Casualty Corporation pays out 64.1% of its earnings in the form of a dividend. 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. Infinity Property and Casualty Corporation has raised its dividend for 9 consecutive years and Mercury General Corporation has raised its dividend for 31 consecutive years. Mercury General Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Infinity Property and Casualty Corporation has a beta of 0.83, meaning that its share price is 17% less volatile than the S&P 500. Comparatively, Mercury General Corporation has a beta of 0.5, meaning that its share price is 50% less volatile than the S&P 500.

Profitability

This table compares Infinity Property and Casualty Corporation and Mercury General Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Infinity Property and Casualty Corporation 2.58% 5.16% 1.49%
Mercury General Corporation 2.45% 6.66% 2.43%

Institutional & Insider Ownership

94.6% of Infinity Property and Casualty Corporation shares are owned by institutional investors. Comparatively, 46.5% of Mercury General Corporation shares are owned by institutional investors. 3.2% of Infinity Property and Casualty Corporation shares are owned by insiders. Comparatively, 34.3% of Mercury General Corporation shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

About Infinity Property and Casualty Corporation

Infinity Property and Casualty Corporation is a holding company. The Company’s segments include Personal Auto, Commercial Vehicle and Classic Collector (its segments are Personal Auto and Commercial Vehicle). The Company writes personal automobile insurance with a concentration on nonstandard automobile insurance, commercial vehicle insurance and classic collector automobile insurance. The Company offers personal and commercial automobile insurance in states, including Arizona, California, Florida and Texas. Personal Automobile is its insurance product, which provides coverage to individuals for liability to others for bodily injury and property damage and for physical damage to an insured’s own vehicle from collision and various other perils. Commercial Vehicle provides coverage to businesses for liability to others for bodily injury and property damage and for physical damage to vehicles from collision. Classic Collector provides protection for classic collectible automobiles.

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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