AON (NYSE:AON) versus HCI Group (NYSE:HCI) Critical Comparison

HCI Group (NYSE:HCI) and AON (NYSE:AON) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their institutional ownership, risk, earnings, profitability, analyst recommendations, dividends and valuation.

Profitability

This table compares HCI Group and AON’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
HCI Group	32.60%	28.80%	12.25%
AON	22.27%	42.13%	7.57%

Volatility & Risk

HCI Group has a beta of 1.03, suggesting that its share price is 3% more volatile than the S&P 500. Comparatively, AON has a beta of 0.66, suggesting that its share price is 34% less volatile than the S&P 500.

Insider & Institutional Ownership

87.0% of HCI Group shares are held by institutional investors. Comparatively, 86.1% of AON shares are held by institutional investors. 18.5% of HCI Group shares are held by insiders. Comparatively, 1.0% of AON shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings for HCI Group and AON, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
HCI Group	0	2	5	0	2.71
AON	0	7	12	0	2.63

HCI Group presently has a consensus target price of $241.67, suggesting a potential upside of 29.69%. AON has a consensus target price of $399.12, suggesting a potential upside of 29.69%. Given HCI Group’s stronger consensus rating and higher probable upside, analysts plainly believe HCI Group is more favorable than AON.

Valuation and Earnings

This table compares HCI Group and AON”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
HCI Group	$900.95 million	2.57	$299.01 million	$23.20	8.03
AON	$17.18 billion	3.80	$3.69 billion	$18.14	16.97

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

Dividends

HCI Group pays an annual dividend of $1.60 per share and has a dividend yield of 0.9%. AON pays an annual dividend of $3.28 per share and has a dividend yield of 1.1%. HCI Group pays out 6.9% of its earnings in the form of a dividend. AON pays out 18.1% 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.

Summary

HCI Group beats AON on 9 of the 16 factors compared between the two stocks.

About HCI Group

HCI Group, Inc., together with its subsidiaries, engages in the property and casualty insurance, insurance management, reinsurance, real estate, and information technology businesses in Florida. It provides residential insurance products, such as homeowners, fire, flood, and wind-only insurance to homeowners, condominium owners, and tenants for properties, as well as offers reinsurance programs. The company also owns and operates waterfront properties and retail shopping centers, and an office building, as well as commercial properties for investment purposes. In addition, it designs and develops web-based applications and products for mobile devices, including SAMS, an online policy administration platform; Harmony, a policy administration platform; ClaimColony, an end-to-end claims management platform; and AtlasViewer, a mapping and data visualization platform. The company was formerly known as Homeowners Choice, Inc. and changed its name to HCI Group, Inc. in May 2013. HCI Group, Inc. was incorporated in 2006 and is headquartered in Tampa, Florida.

About AON

Aon Plc engages in the provision of risk, health, and wealth solutions. It focuses on risk capital including claim management, reinsurance, risk analysis, management, retention, and transfer; and human capital involving analytics, health and benefits, investments, pensions and retirement, talent and rewards, and workplace wellbeing. The company was founded in 1982 and is headquartered in Dublin, Ireland.