RLI (NYSE:RLI) & Loews (NYSE:L) Critical Contrast

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

Analyst Recommendations

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Loews 0 1 1 0 2.50
RLI 0 3 1 0 2.25

Loews currently has a consensus target price of $87.00, indicating a potential upside of 52.52%. RLI has a consensus target price of $112.67, indicating a potential upside of 9.20%. Given Loews’ stronger consensus rating and higher possible upside, analysts clearly believe Loews is more favorable than RLI.

Dividends

Loews pays an annual dividend of $0.25 per share and has a dividend yield of 0.4%. RLI pays an annual dividend of $1.00 per share and has a dividend yield of 1.0%. RLI pays out 38.6% of its earnings in the form of a dividend. Loews has raised its dividend for 1 consecutive years and RLI has raised its dividend for 26 consecutive years. RLI is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

59.0% of Loews shares are owned by institutional investors. Comparatively, 80.0% of RLI shares are owned by institutional investors. 16.2% of Loews shares are owned by insiders. Comparatively, 5.1% of RLI shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Loews and RLI’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Loews $12.58 billion 1.17 -$931.00 million N/A N/A
RLI $983.63 million 4.74 $157.09 million $2.59 39.83

RLI has lower revenue, but higher earnings than Loews.

Volatility and Risk

Loews has a beta of 0.93, suggesting that its share price is 7% less volatile than the S&P 500. Comparatively, RLI has a beta of 0.38, suggesting that its share price is 62% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Loews 10.48% 5.86% 1.38%
RLI 24.38% 12.30% 3.57%

Summary

RLI beats Loews on 9 of the 15 factors compared between the two stocks.

About Loews

Loews Corp. operates as a holding company, which engages in the oil and gas business. It operates through the following segments: CNA Financial, Diamond Offshore, Boardwalk Pipeline, Loews Hotels and Corporate. The CNA Financial segment offers property, casualty, insurance, and underwriting services. The Diamond Offshore segment manages drilling rigs. The Boardwalk Pipeline segment transports and stores natural gas and natural gas liquids. The Loews Hotels segment operates restaurants and chain of hotels. The Corporate segment includes investment income and interest expenses. The company was founded by Laurence A. Tisch and Preston Robert Tisch in 1954 and is headquartered in New York, NY.

About RLI

RLI Corp. operates as a holding company, which engages in the provision of insurance and underwriting services. It operates through the following segments: Casualty, Property and Surety. The Casualty segment offers healthcare and transportation insurance. The Property segment consists of commercial fire, earthquake, difference in conditions, marine, facultative and treaty reinsurance, including crop and select personal lines policies, including pet insurance and homeowners reinsurance services. The Surety segment engages in writing contract surety coverage, licenses and bonds for commercial, energy and industrial sectors. The company was founded by Gerald D. Stephens in 1965 and is headquartered in Peoria, IL.

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