Reviewing Selective Insurance Group (NASDAQ:SIGI) & Waterdrop (NYSE:WDH)

Waterdrop (NYSE:WDH) and Selective Insurance Group (NASDAQ:SIGI) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, risk, earnings, institutional ownership, valuation, dividends and profitability.

Institutional and Insider Ownership

2.0% of Waterdrop shares are held by institutional investors. Comparatively, 82.9% of Selective Insurance Group shares are held by institutional investors. 24.6% of Waterdrop shares are held by insiders. Comparatively, 0.8% of Selective Insurance Group shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Waterdrop and Selective Insurance Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Waterdrop	10.69%	10.47%	7.40%
Selective Insurance Group	9.10%	14.51%	3.22%

Analyst Ratings

This is a summary of current ratings for Waterdrop and Selective Insurance Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Waterdrop	0	1	0	0	2.00
Selective Insurance Group	1	5	2	0	2.12

Selective Insurance Group has a consensus price target of $99.33, indicating a potential upside of 16.06%. Given Selective Insurance Group’s stronger consensus rating and higher probable upside, analysts clearly believe Selective Insurance Group is more favorable than Waterdrop.

Valuation and Earnings

This table compares Waterdrop and Selective Insurance Group”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Waterdrop	$568.81 million	0.66	$81.36 million	$0.21	4.93
Selective Insurance Group	$5.34 billion	0.96	$466.41 million	$8.06	10.62

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

Volatility and Risk

Waterdrop has a beta of -0.24, meaning that its share price is 124% less volatile than the S&P 500. Comparatively, Selective Insurance Group has a beta of 0.26, meaning that its share price is 74% less volatile than the S&P 500.

Dividends

Waterdrop pays an annual dividend of $0.05 per share and has a dividend yield of 4.8%. Selective Insurance Group pays an annual dividend of $1.72 per share and has a dividend yield of 2.0%. Waterdrop pays out 23.8% of its earnings in the form of a dividend. Selective Insurance Group pays out 21.3% 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. Selective Insurance Group has increased its dividend for 11 consecutive years.

Summary

Selective Insurance Group beats Waterdrop on 13 of the 17 factors compared between the two stocks.

About Waterdrop

Waterdrop Inc., through its subsidiaries, provides online insurance brokerage services to match and connect users with related insurance products underwritten by insurance companies in the People's Republic of China. The company offers short-term health and long-term health and life insurance products and services. It also operates a medical crowdfunding platform. Waterdrop Inc. was founded in 2016 and is headquartered in Beijing, the People's Republic of China.

About Selective Insurance Group

Selective Insurance Group, Inc., together with its subsidiaries, provides insurance products and services in the United States. The company operates through four segments: Standard Commercial Lines, Standard Personal Lines, E&S Lines, and Investments. It offers casualty insurance products that covers the financial consequences of employee injuries in the course of employment and bodily injury and/or property damage to a third party; property insurance products, which covers the accidental loss of an insured's real property, personal property, and/or earnings due to the property's loss; and flood insurance products. The company also invests in fixed income investments and commercial mortgage loans, as well as equity securities, short-term investments, and alternative investments, and other investments. It offers its insurance products and services to businesses, non-profit organizations, local government agencies, and individuals through independent retail agents and wholesale general agents. The company was founded in 1926 and is headquartered in Branchville, New Jersey.