Critical Analysis: HCI Group (NYSE:HCI) & Protective Insurance (NYSE:PTVCA)

HCI Group (NYSE:HCI) and Protective Insurance (NASDAQ:PTVCA) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, earnings, risk, valuation, profitability and analyst recommendations.

Valuation and Earnings

This table compares HCI Group and Protective Insurance’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
HCI Group $231.29 million 1.46 $17.73 million $3.23 12.82
Protective Insurance $439.17 million 0.52 -$34.08 million N/A N/A

HCI Group has higher earnings, but lower revenue than Protective Insurance.

Risk and Volatility

HCI Group has a beta of 0.76, indicating that its stock price is 24% less volatile than the S&P 500. Comparatively, Protective Insurance has a beta of 0.63, indicating that its stock price is 37% less volatile than the S&P 500.

Institutional and Insider Ownership

60.8% of HCI Group shares are held by institutional investors. Comparatively, 3.9% of Protective Insurance shares are held by institutional investors. 24.1% of HCI Group shares are held by insiders. Comparatively, 28.2% of Protective Insurance shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
HCI Group 6.63% 7.95% 1.90%
Protective Insurance -7.02% -6.94% -1.69%

Analyst Recommendations

This is a breakdown of current ratings for HCI Group and Protective Insurance, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
HCI Group 0 1 1 0 2.50
Protective Insurance 0 0 0 0 N/A

HCI Group currently has a consensus target price of $46.00, indicating a potential upside of 11.08%. Given HCI Group’s higher possible upside, equities research analysts clearly believe HCI Group is more favorable than Protective Insurance.

Dividends

HCI Group pays an annual dividend of $1.60 per share and has a dividend yield of 3.9%. Protective Insurance pays an annual dividend of $0.40 per share and has a dividend yield of 2.5%. HCI Group pays out 49.5% of its earnings in the form of a dividend. HCI Group has raised its dividend for 5 consecutive years. HCI Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

HCI Group beats Protective Insurance on 11 of the 14 factors compared between the two stocks.

HCI Group Company Profile

HCI Group, Inc. engages in the property and casualty insurance, reinsurance, real estate, and information technology businesses in Florida. It provides residential insurance products, such as homeowners insurance, flood insurance, and wind-only insurance to homeowners, condominium owners, and tenants, as well as offers reinsurance programs. The company also owns and operates one full-service restaurant, two marinas, three retail shopping centers, one office building, and one vacant shopping center for investment purposes. In addition, it designs and develops Web-based applications and products for mobile devices. The company was formerly known as Homeowners Choice, Inc. and changed its name to HCI Group, Inc. in May 2013. HCI Group, Inc. was founded in 2006 and is headquartered in Tampa, Florida.

Protective Insurance Company Profile

Protective Insurance Corporation, through its subsidiaries, engages in marketing and underwriting property and casualty insurance products. The company offers a range of fleet transportation insurance products, including commercial motor vehicle liability, physical damage, and general liability insurance; workers compensation insurance; medical and indemnity insurance products; non-trucking motor vehicle liability insurance; fidelity and surety bonds; and inland marine products consisting of cargo insurance. It also provides various additional services, such as risk surveys and analyses, safety program design and monitoring, government compliance assistance, loss control, and cost studies; research, development, and consultation in connection with new insurance programs that comprise development of systems to assist customers in monitoring their accident data; and claims handling services to clients with self-insurance programs. It serves trucking and public transportation fleets, as well as independent contractors in the trucking industry. The company primarily operates in the United States, Canada, Bermuda, and Puerto Rico. Protective Insurance Corporation was founded in 1930 and is headquartered in Carmel, Indiana.

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