Analyzing Stewart Information Services (NYSE:STC) & HCI Group (NYSE:HCI)

Stewart Information Services (NYSE:STC) and HCI Group (NYSE:HCI) are both mid-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, analyst recommendations, valuation, profitability, dividends, risk and institutional ownership.

Analyst Ratings

This is a breakdown of recent recommendations for Stewart Information Services and HCI Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Stewart Information Services	0	1	2	0	2.67
HCI Group	0	1	5	1	3.00

Stewart Information Services presently has a consensus target price of $77.50, indicating a potential upside of 1.14%. HCI Group has a consensus target price of $230.00, indicating a potential upside of 29.40%. Given HCI Group’s stronger consensus rating and higher possible upside, analysts clearly believe HCI Group is more favorable than Stewart Information Services.

Volatility & Risk

Stewart Information Services has a beta of 0.95, suggesting that its stock price is 5% less volatile than the S&P 500. Comparatively, HCI Group has a beta of 1.16, suggesting that its stock price is 16% more volatile than the S&P 500.

Dividends

Stewart Information Services pays an annual dividend of $2.10 per share and has a dividend yield of 2.7%. HCI Group pays an annual dividend of $1.60 per share and has a dividend yield of 0.9%. Stewart Information Services pays out 58.5% of its earnings in the form of a dividend. HCI Group pays out 10.2% 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. Stewart Information Services has raised its dividend for 4 consecutive years. Stewart Information Services is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

96.9% of Stewart Information Services shares are held by institutional investors. Comparatively, 87.0% of HCI Group shares are held by institutional investors. 1.5% of Stewart Information Services shares are held by insiders. Comparatively, 21.9% of HCI Group shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Stewart Information Services and HCI Group”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Stewart Information Services	$2.80 billion	0.77	$73.31 million	$3.59	21.35
HCI Group	$816.85 million	2.82	$109.95 million	$15.66	11.35

HCI Group has lower revenue, but higher earnings than Stewart Information Services. HCI Group is trading at a lower price-to-earnings ratio than Stewart Information Services, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Stewart Information Services and HCI Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Stewart Information Services	3.65%	8.57%	4.45%
HCI Group	18.58%	25.84%	6.58%

Summary

HCI Group beats Stewart Information Services on 13 of the 18 factors compared between the two stocks.

About Stewart Information Services

Stewart Information Services Corporation, through its subsidiaries, provides title insurance and real estate transaction related services in the United States and internationally. The company involves in searching, examining, closing, and insuring the condition of the title to real property. It also offers home and personal insurance services; services for tax-deferred exchanges; and digital customer engagement platform services. It also provides appraisal management, online notarization and closing, credit and real estate information, and search and valuation services. The company serves homebuyers and sellers, residential and commercial real estate professionals, mortgage lenders and servicers, title agencies and real estate attorneys, and home builders through direct operations, network of independent agencies, and other businesses. The company was founded in 1893 and is headquartered in Houston, Texas.

About HCI Group

HCI Group, Inc., together with its subsidiaries, engages in the property and casualty insurance, insurance management, reinsurance, real estate, and information technology businesses in Florida. It provides residential insurance products, such as homeowners, fire, flood, and wind-only insurance to homeowners, condominium owners, and tenants for properties, as well as offers reinsurance programs. The company also owns and operates waterfront properties and retail shopping centers, and an office building, as well as commercial properties for investment purposes. In addition, it designs and develops web-based applications and products for mobile devices, including SAMS, an online policy administration platform; Harmony, a policy administration platform; ClaimColony, an end-to-end claims management platform; and AtlasViewer, a mapping and data visualization platform. The company was formerly known as Homeowners Choice, Inc. and changed its name to HCI Group, Inc. in May 2013. HCI Group, Inc. was incorporated in 2006 and is headquartered in Tampa, Florida.