Critical Analysis: National Interstate (NATL) & Heritage Insurance Holdings (HRTG)
National Interstate (NASDAQ: NATL) and Heritage Insurance Holdings (NYSE:HRTG) are both financials companies, but which is the superior business? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, institutional ownership, valuation, dividends, risk and profitability.
Risk and Volatility
National Interstate has a beta of 0.88, indicating that its stock price is 12% less volatile than the S&P 500. Comparatively, Heritage Insurance Holdings has a beta of 1.3, indicating that its stock price is 30% more volatile than the S&P 500.
This table compares National Interstate and Heritage Insurance Holdings’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Heritage Insurance Holdings||5.07%||5.67%||1.98%|
Valuation & Earnings
This table compares National Interstate and Heritage Insurance Holdings’ top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Heritage Insurance Holdings||$408.34 million||0.80||$43.38 million||$0.72||15.64|
Heritage Insurance Holdings has higher revenue and earnings than National Interstate. Heritage Insurance Holdings is trading at a lower price-to-earnings ratio than National Interstate, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
84.9% of National Interstate shares are owned by institutional investors. Comparatively, 61.3% of Heritage Insurance Holdings shares are owned by institutional investors. 11.8% of National Interstate shares are owned by insiders. Comparatively, 16.1% of Heritage Insurance Holdings shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
National Interstate pays an annual dividend of $0.56 per share and has a dividend yield of 1.7%. Heritage Insurance Holdings pays an annual dividend of $0.24 per share and has a dividend yield of 2.1%. National Interstate pays out 40.6% of its earnings in the form of a dividend. Heritage Insurance Holdings pays out 33.3% 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. Heritage Insurance Holdings is clearly the better dividend stock, given its higher yield and lower payout ratio.
This is a breakdown of current recommendations for National Interstate and Heritage Insurance Holdings, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Heritage Insurance Holdings||0||0||3||0||3.00|
Heritage Insurance Holdings has a consensus price target of $16.33, suggesting a potential upside of 45.06%. Given Heritage Insurance Holdings’ higher probable upside, analysts clearly believe Heritage Insurance Holdings is more favorable than National Interstate.
Heritage Insurance Holdings beats National Interstate on 8 of the 12 factors compared between the two stocks.
National Interstate Company Profile
National Interstate Corporation and its subsidiaries operate as an insurance holding company that underwrites and sells traditional and alternative property and casualty insurance products to the passenger transportation, trucking and moving and storage industries, general commercial insurance to small businesses in Hawaii and Alaska and personal insurance to owners of recreational vehicles throughout the United States. The Company is a specialty property and casualty insurance company with a focus on the transportation industry. The Company operates through property and casualty insurance segment. The Company offers approximately 40 product lines in the specialty property and casualty insurance market, which it groups into approximately four general business components: alternative risk transfer (ART), transportation, specialty personal lines, and Hawaii and Alaska based on the class of business, insureds’ risk participation or geographic location.
Heritage Insurance Holdings Company Profile
Heritage Insurance Holdings, Inc. (Heritage Insurance) is a property and casualty insurance holding company. The Company provides personal and commercial residential insurance. Through its subsidiary, Heritage Property & Casualty Insurance Company (Heritage P&C), it provides personal residential insurance for single-family homeowners and condominium owners, rental property insurance and commercial residential insurance in the state of Florida and North Carolina. The Company is vertically integrated and controls or manages all aspects of insurance underwriting, customer service, actuarial analysis, distribution and claims processing and adjusting. The Company’s primary products are personal and commercial residential insurance, which it offers only in Florida. As of December 31, 2016, it marketed and wrote personal lines voluntary policies through a network of approximately 1,900 independent agents. It had 150,998 voluntary personal residential policies as of December 31, 2016.
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