The Travelers Companies (NYSE:TRV) and The Hartford Financial Services Group (NYSE:HIG) are both large-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, risk, profitability, valuation, dividends, institutional ownership and analyst recommendations.
Insider and Institutional Ownership
81.8% of The Travelers Companies shares are owned by institutional investors. Comparatively, 90.5% of The Hartford Financial Services Group shares are owned by institutional investors. 0.8% of The Travelers Companies shares are owned by company insiders. Comparatively, 1.7% of The Hartford Financial Services Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Risk and Volatility
The Travelers Companies has a beta of 0.77, meaning that its share price is 23% less volatile than the S&P 500. Comparatively, The Hartford Financial Services Group has a beta of 1.05, meaning that its share price is 5% more volatile than the S&P 500.
Analyst Recommendations
This is a breakdown of current ratings and recommmendations for The Travelers Companies and The Hartford Financial Services Group, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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The Travelers Companies | 3 | 10 | 5 | 0 | 2.11 |
The Hartford Financial Services Group | 0 | 2 | 11 | 0 | 2.85 |
The Travelers Companies presently has a consensus price target of $135.20, indicating a potential downside of 11.26%. The Hartford Financial Services Group has a consensus price target of $54.2308, indicating a potential upside of 1.14%. Given The Hartford Financial Services Group's stronger consensus rating and higher probable upside, analysts plainly believe The Hartford Financial Services Group is more favorable than The Travelers Companies.
Profitability
This table compares The Travelers Companies and The Hartford Financial Services Group's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
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The Travelers Companies | 7.13% | 8.63% | 2.04% |
The Hartford Financial Services Group | 8.50% | 12.19% | 2.80% |
Dividends
The Travelers Companies pays an annual dividend of $3.40 per share and has a dividend yield of 2.2%. The Hartford Financial Services Group pays an annual dividend of $1.40 per share and has a dividend yield of 2.6%. The Travelers Companies pays out 35.4% of its earnings in the form of a dividend. The Hartford Financial Services Group pays out 24.8% 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. The Travelers Companies has raised its dividend for 16 consecutive years and The Hartford Financial Services Group has raised its dividend for 1 consecutive years. The Hartford Financial Services Group is clearly the better dividend stock, given its higher yield and lower payout ratio.
Earnings and Valuation
This table compares The Travelers Companies and The Hartford Financial Services Group's revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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The Travelers Companies | $31.58 billion | 1.22 | $2.62 billion | $9.60 | 15.87 |
The Hartford Financial Services Group | $20.74 billion | 0.92 | $2.09 billion | $5.65 | 9.49 |
The Travelers Companies has higher revenue and earnings than The Hartford Financial Services Group. The Hartford Financial Services Group is trading at a lower price-to-earnings ratio than The Travelers Companies, indicating that it is currently the more affordable of the two stocks.
Summary
The Hartford Financial Services Group beats The Travelers Companies on 11 of the 17 factors compared between the two stocks.