Head-To-Head Review: The Hanover Insurance Group (NYSE:THG) versus Stewart Information Services (NYSE:STC)

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

Profitability

This table compares Stewart Information Services and The Hanover Insurance 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%
The Hanover Insurance Group	9.71%	21.73%	4.30%

Dividends

Stewart Information Services pays an annual dividend of $2.10 per share and has a dividend yield of 2.9%. The Hanover Insurance Group pays an annual dividend of $3.80 per share and has a dividend yield of 2.0%. Stewart Information Services pays out 58.5% of its earnings in the form of a dividend. The Hanover Insurance Group pays out 22.0% 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 increased its dividend for 4 consecutive years and The Hanover Insurance Group has increased its dividend for 20 consecutive years.

Earnings & Valuation

This table compares Stewart Information Services and The Hanover Insurance Group”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Stewart Information Services	$2.49 billion	0.81	$73.31 million	$3.59	19.98
The Hanover Insurance Group	$6.24 billion	1.06	$426.00 million	$17.29	10.74

The Hanover Insurance Group has higher revenue and earnings than Stewart Information Services. The Hanover Insurance 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.

Risk and Volatility

Stewart Information Services has a beta of 1.04, indicating that its share price is 4% more volatile than the S&P 500. Comparatively, The Hanover Insurance Group has a beta of 0.33, indicating that its share price is 67% less volatile than the S&P 500.

Insider and Institutional Ownership

96.9% of Stewart Information Services shares are held by institutional investors. Comparatively, 86.6% of The Hanover Insurance Group shares are held by institutional investors. 2.8% of Stewart Information Services shares are held by company insiders. Comparatively, 2.5% of The Hanover Insurance Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Stewart Information Services and The Hanover Insurance Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Stewart Information Services	0	1	2	0	2.67
The Hanover Insurance Group	0	3	5	0	2.63

Stewart Information Services currently has a consensus price target of $81.50, suggesting a potential upside of 13.60%. The Hanover Insurance Group has a consensus price target of $199.00, suggesting a potential upside of 7.12%. Given Stewart Information Services’ stronger consensus rating and higher probable upside, research analysts plainly believe Stewart Information Services is more favorable than The Hanover Insurance Group.

Summary

The Hanover Insurance Group beats Stewart Information Services on 9 of the 17 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 The Hanover Insurance Group

The Hanover Insurance Group, Inc., through its subsidiaries, provides various property and casualty insurance products and services in the United States. The company operates through four segments: Core Commercial, Specialty, Personal Lines, and Other. The Commercial Lines segment offers commercial multiple peril, commercial automobile, workers' compensation, and other commercial lines coverage. The Specialty segment provides professional and executive Lines, marine, and surety and other, as well as specialty property and casualty, such as program business, specialty industrial business, excess and surplus business, and specialty general liability coverage. The Personal Lines segment offers personal automobile and homeowner's coverages, as well as other personal coverages, such as personal umbrella, inland marine, fire, personal watercraft, personal cyber, and other miscellaneous coverages. The Other segment markets investment advisory services to institutions, insurance companies, pension funds, and other organizations. The Hanover Insurance Group, Inc. markets its products and services through independent agents and brokers. The company was formerly known as Allmerica Financial Corp. and changed its name to The Hanover Insurance Group, Inc. in December 2005. The Hanover Insurance Group, Inc. was founded in 1852 and is headquartered in Worcester, Massachusetts.