Erie Indemnity (NASDAQ:ERIE) and The Travelers Companies (NYSE:TRV) are both large-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their earnings, risk, valuation, profitability, institutional ownership, dividends and analyst recommendations.
Risk & Volatility
Erie Indemnity has a beta of 0.43, suggesting that its stock price is 57% less volatile than the S&P 500. Comparatively, The Travelers Companies has a beta of 0.77, suggesting that its stock price is 23% less volatile than the S&P 500.
Insider and Institutional Ownership
35.0% of Erie Indemnity shares are owned by institutional investors. Comparatively, 81.8% of The Travelers Companies shares are owned by institutional investors. 45.8% of Erie Indemnity shares are owned by company insiders. Comparatively, 0.8% of The Travelers Companies shares are owned 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.
Profitability
This table compares Erie Indemnity and The Travelers Companies' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
Erie Indemnity | 11.49% | 24.73% | 14.12% |
The Travelers Companies | 7.13% | 8.63% | 2.04% |
Dividends
Erie Indemnity pays an annual dividend of $4.14 per share and has a dividend yield of 1.7%. The Travelers Companies pays an annual dividend of $3.40 per share and has a dividend yield of 2.3%. Erie Indemnity pays out 68.3% of its earnings in the form of a dividend. The Travelers Companies pays out 35.4% 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. Erie Indemnity has raised its dividend for 1 consecutive years and The Travelers Companies has raised its dividend for 16 consecutive years. The Travelers Companies is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Analyst Ratings
This is a summary of recent ratings and recommmendations for Erie Indemnity and The Travelers Companies, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
---|
Erie Indemnity | 0 | 0 | 1 | 0 | 3.00 |
The Travelers Companies | 3 | 10 | 5 | 0 | 2.11 |
The Travelers Companies has a consensus target price of $135.20, suggesting a potential downside of 10.48%. Given The Travelers Companies' higher probable upside, analysts clearly believe The Travelers Companies is more favorable than Erie Indemnity.
Valuation and Earnings
This table compares Erie Indemnity and The Travelers Companies' revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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Erie Indemnity | $2.48 billion | 4.62 | $316.82 million | $6.06 | 40.85 |
The Travelers Companies | $31.58 billion | 1.21 | $2.62 billion | $9.60 | 15.73 |
The Travelers Companies has higher revenue and earnings than Erie Indemnity. The Travelers Companies is trading at a lower price-to-earnings ratio than Erie Indemnity, indicating that it is currently the more affordable of the two stocks.
Summary
The Travelers Companies beats Erie Indemnity on 10 of the 17 factors compared between the two stocks.