Berkshire Hathaway (BRK-B) & RLI Corp. (RLI) Critical Analysis

Berkshire Hathaway (NYSE: BRK-B) and RLI Corp. (NYSE:RLI) are both mid-cap financials companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, earnings, valuation, profitability, analyst recommendations and risk.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Berkshire Hathaway and RLI Corp., as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Berkshire Hathaway 0 0 0 0 N/A
RLI Corp. 1 3 0 0 1.75

RLI Corp. has a consensus target price of $41.33, suggesting a potential downside of 28.30%. Given RLI Corp.’s higher possible upside, analysts plainly believe RLI Corp. is more favorable than Berkshire Hathaway.

Institutional and Insider Ownership

82.9% of RLI Corp. shares are owned by institutional investors. 6.1% of RLI Corp. shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Berkshire Hathaway and RLI Corp.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Berkshire Hathaway 7.57% 5.76% 2.65%
RLI Corp. 12.38% 10.10% 3.09%

Valuation and Earnings

This table compares Berkshire Hathaway and RLI Corp.’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Berkshire Hathaway $232.80 billion 0.00 $43.46 billion N/A N/A
RLI Corp. $811.78 million 3.13 $129.75 million $2.26 25.51

Berkshire Hathaway has higher revenue and earnings than RLI Corp..

Dividends

RLI Corp. pays an annual dividend of $0.84 per share and has a dividend yield of 1.5%. Berkshire Hathaway does not pay a dividend. RLI Corp. pays out 37.2% of its earnings in the form of a dividend. RLI Corp. has raised its dividend for 40 consecutive years.

Summary

RLI Corp. beats Berkshire Hathaway on 10 of the 13 factors compared between the two stocks.

Berkshire Hathaway Company Profile

Berkshire Hathaway Inc. is a holding company owning subsidiaries engaged in various business activities. Its segments include Insurance, such as GEICO, Berkshire Hathaway Primary Group, General Re Corporation and Berkshire Hathaway Reinsurance Group; Burlington Northern Santa Fe, LLC, which is engaged in the operation of the railroad system; Berkshire Hathaway Energy, which includes regulated electric and gas utility; Manufacturing, which includes manufacturers of various products, including industrial, consumer and building products; McLane Company, which is engaged in the wholesale distribution of groceries and non-food items; Service and retailing, which includes providers of various services, including fractional aircraft ownership programs, aviation pilot training and various retailing businesses, and Finance and financial products, which includes manufactured housing and related consumer financing, transportation equipment, manufacturing and leasing, and furniture leasing.

RLI Corp. Company Profile

RLI Corp. is a specialty insurance company. The Company underwrites selected property and casualty insurance through subsidiaries, as well as offers insurance coverages in both the specialty admitted, and excess and surplus markets. It operates through Casualty, Property and Surety segments. Its Casualty segment consists of commercial and personal umbrella, general liability, commercial transportation, professional services, small commercial, executive products, medical professional liability and other casualty businesses. Its property segment consists of commercial property, marine, specialty personal, property reinsurance and crop reinsurance businesses. Its surety segment consists of miscellaneous, commercial, contract and energy businesses. The Company conducts its operations principally through three insurance companies: RLI Insurance Company (RLI Ins.), Mt. Hawley Insurance Company (Mt. Hawley) and Contractors Bonding and Insurance Company (CBIC).

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