Old Republic International (NYSE:ORI) vs. Kemper (NYSE:KMPR) Critical Review

Old Republic International (NYSE:ORI) and Kemper (NYSE:KMPR) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their risk, valuation, earnings, dividends, institutional ownership, profitability and analyst recommendations.

Analyst Ratings

This is a summary of current ratings and price targets for Old Republic International and Kemper, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Old Republic International	0	0	1	1	3.50
Kemper	2	0	3	1	2.50

Old Republic International currently has a consensus target price of $46.00, suggesting a potential upside of 10.13%. Kemper has a consensus target price of $72.75, suggesting a potential upside of 41.40%. Given Kemper’s higher possible upside, analysts clearly believe Kemper is more favorable than Old Republic International.

Dividends

Old Republic International pays an annual dividend of $1.16 per share and has a dividend yield of 2.8%. Kemper pays an annual dividend of $1.28 per share and has a dividend yield of 2.5%. Old Republic International pays out 39.7% of its earnings in the form of a dividend. Kemper pays out 24.1% 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. Old Republic International has raised its dividend for 45 consecutive years and Kemper has raised its dividend for 1 consecutive years. Old Republic International is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

70.9% of Old Republic International shares are held by institutional investors. Comparatively, 86.2% of Kemper shares are held by institutional investors. 1.1% of Old Republic International shares are held by insiders. Comparatively, 0.8% of Kemper shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

This table compares Old Republic International and Kemper’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Old Republic International	10.31%	20.95%	4.45%
Kemper	7.18%	14.39%	3.25%

Earnings and Valuation

This table compares Old Republic International and Kemper”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Old Republic International	$8.23 billion	1.26	$852.80 million	$2.92	14.30
Kemper	$4.64 billion	0.70	$317.80 million	$5.31	9.69

Old Republic International has higher revenue and earnings than Kemper. Kemper is trading at a lower price-to-earnings ratio than Old Republic International, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Old Republic International has a beta of 0.78, meaning that its share price is 22% less volatile than the S&P 500. Comparatively, Kemper has a beta of 1.3, meaning that its share price is 30% more volatile than the S&P 500.

Summary

Old Republic International beats Kemper on 11 of the 17 factors compared between the two stocks.

About Old Republic International

Old Republic International Corporation, through its subsidiaries, engages in the insurance underwriting and related services business primarily in the United States and Canada. It operates through three segments: General Insurance, Title Insurance, and Republic Financial Indemnity Group Run-off Business. The General Insurance segment offers aviation, commercial auto, commercial multi-peril, commercial property, general liability, home and auto warranty, inland marine, travel accident, and workers' compensation insurance products; and financial indemnity products for specialty coverages, including errors and omissions, fidelity, directors and officers, and surety. This segment provides its insurance products to businesses, state and local government, and other institutions in transportation, commercial construction, healthcare, education, retail and wholesale trade, forest products, energy, general manufacturing, and financial services industries. The Title Insurance segment offers lenders' and owners' policies to real estate purchasers and investors based upon searches of the public records. This segment also provides escrow closing and construction disbursement services; and real estate information products, national default management services, and various other services pertaining to real estate transfers and loan transactions. The Republic Financial Indemnity Group Run-off Business segment offers private mortgage insurance coverage that protects mortgage lenders and investors from default related losses on residential mortgage loans made primarily to homebuyers. Old Republic International Corporation was founded in 1923 and is based in Chicago, Illinois.

About Kemper

Kemper Corporation, a diversified insurance holding company, engages in the provision of insurance products to individuals and businesses in the United States. The company operates through three segments: Specialty Property & Casualty Insurance, Preferred Property & Casualty Insurance, and Life & Health Insurance. It provides preferred and specialty automobile, homeowners, renters, fire, umbrella, general liability, and various other property and casualty insurance to individuals, as well as commercial automobile insurance to businesses. The company also offers life insurance, including permanent and term insurance; and supplemental accident and health insurance products, such as Medicare supplement insurance, fixed hospital indemnity, home health care, specified disease, and accident-only plans to individuals in rural, suburban, and urban areas. It distributes its products through independent agents and brokers. The company was formerly known as Unitrin, Inc. and changed its name to Kemper Corporation in August 2011. Kemper Corporation was incorporated in 1990 and is headquartered in Chicago, Illinois.