Amerisafe (NASDAQ:AMSF) and RLI (NYSE:RLI) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, earnings, risk, dividends, institutional ownership and profitability.

Analyst Ratings

This is a breakdown of recent ratings for Amerisafe and RLI, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Amerisafe 0 1 3 0 2.75
RLI 0 2 1 0 2.33

Amerisafe presently has a consensus price target of $77.67, suggesting a potential upside of 22.39%. RLI has a consensus price target of $92.50, suggesting a potential upside of 4.96%. Given Amerisafe’s stronger consensus rating and higher probable upside, analysts clearly believe Amerisafe is more favorable than RLI.

Volatility and Risk

Amerisafe has a beta of 0.37, meaning that its stock price is 63% less volatile than the S&P 500. Comparatively, RLI has a beta of 0.31, meaning that its stock price is 69% less volatile than the S&P 500.

Institutional and Insider Ownership

84.1% of RLI shares are held by institutional investors. 1.7% of Amerisafe shares are held by company insiders. Comparatively, 5.1% of RLI shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Amerisafe and RLI’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Amerisafe $370.37 million 3.31 $92.69 million $4.60 13.80
RLI $1.00 billion 3.95 $191.64 million $2.57 34.29

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

Profitability

This table compares Amerisafe and RLI’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Amerisafe 25.63% 20.27% 5.90%
RLI 12.70% 12.03% 3.39%

Dividends

Amerisafe pays an annual dividend of $1.08 per share and has a dividend yield of 1.7%. RLI pays an annual dividend of $0.96 per share and has a dividend yield of 1.1%. Amerisafe pays out 23.5% of its earnings in the form of a dividend. RLI pays out 37.4% 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. Amerisafe has increased its dividend for 5 consecutive years and RLI has increased its dividend for 43 consecutive years. Amerisafe is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Amerisafe beats RLI on 10 of the 17 factors compared between the two stocks.

About Amerisafe

AMERISAFE, Inc., an insurance holding company, underwrites workers' compensation insurance in the United States. Its workers' compensation insurance policies provide benefits to injured employees for temporary or permanent disability, death, and medical and hospital expenses. The company provides workers' compensation insurance for small to mid-sized employers engaged in hazardous industries, principally construction, trucking, logging and lumber, manufacturing, agriculture, maritime, and oil and gas. The company was incorporated in 1985 and is based in DeRidder, Louisiana.

About RLI

RLI Corp., an insurance holding company, underwrites property and casualty insurance in the United States and internationally. Its Casualty segment provides commercial and personal coverage products; and general liability products, such as coverage for third-party liability of commercial insureds, including manufacturers, contractors, apartments, and mercantile. This segment also offers coverages for security guards and in the areas of onshore energy-related businesses and environmental liability for underground storage tanks, contractors and asbestos, and environmental remediation specialists; and professional liability coverages focuses on providing errors and omission coverage to small to medium-sized design, technical, computer, and miscellaneous professionals. In addition, this segment provides commercial automobile liability and physical damage insurance to local, intermediate and long haul truckers, public transportation entities, and equipment dealers; incidental and related insurance coverages; inland marine coverages; management liability coverages, such as directors and officers liability insurance, fiduciary liability and fidelity coverages, and for low to moderate classes of risks, including public and private businesses; and healthcare liability and home business insurance products. The company's Property segment offers commercial property, cargo, hull, protection and indemnity, marine liability, inland marine, homeowners' and dwelling fire, and other property insurance products. Its Surety segment offers small bonds for businesses and individuals; bonds for small to medium-sized contractors; commercial surety bonds for medium-to-large businesses; and commercial surety bonds for the energy, petrochemical, and refining industries. The company also underwrites various reinsurance coverages. The company markets its products through branch offices and independent agents. RLI Corp. was founded in 1965 and is headquartered in Peoria, Illinois.

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