The Travelers Companies (NYSE:TRV) and Hilltop (NYSE:HTH) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their risk, analyst recommendations, dividends, institutional ownership, profitability, valuation and earnings.
Analyst Ratings
This is a breakdown of recent recommendations and price targets for The Travelers Companies and Hilltop, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
---|
The Travelers Companies | 3 | 10 | 5 | 0 | 2.11 |
Hilltop | 0 | 1 | 3 | 0 | 2.75 |
The Travelers Companies presently has a consensus price target of $135.20, suggesting a potential downside of 10.10%. Hilltop has a consensus price target of $27.00, suggesting a potential downside of 21.12%. Given The Travelers Companies' higher probable upside, analysts clearly believe The Travelers Companies is more favorable than Hilltop.
Dividends
The Travelers Companies pays an annual dividend of $3.40 per share and has a dividend yield of 2.3%. Hilltop pays an annual dividend of $0.48 per share and has a dividend yield of 1.4%. The Travelers Companies pays out 35.4% of its earnings in the form of a dividend. Hilltop pays out 19.7% 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 Hilltop has raised its dividend for 1 consecutive years. The Travelers Companies is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Volatility and Risk
The Travelers Companies has a beta of 0.77, meaning that its share price is 23% less volatile than the S&P 500. Comparatively, Hilltop has a beta of 1.2, meaning that its share price is 20% more volatile than the S&P 500.
Earnings and Valuation
This table compares The Travelers Companies and Hilltop's revenue, earnings per share (EPS) 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 | 1.20 | $2.62 billion | $9.60 | 15.67 |
Hilltop | $1.82 billion | 1.55 | $225.29 million | $2.44 | 14.03 |
The Travelers Companies has higher revenue and earnings than Hilltop. Hilltop 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.
Profitability
This table compares The Travelers Companies and Hilltop's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
The Travelers Companies | 7.13% | 8.63% | 2.04% |
Hilltop | 18.09% | 15.34% | 2.14% |
Institutional and Insider Ownership
81.8% of The Travelers Companies shares are held by institutional investors. Comparatively, 61.1% of Hilltop shares are held by institutional investors. 0.8% of The Travelers Companies shares are held by insiders. Comparatively, 20.9% of Hilltop 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.
Summary
The Travelers Companies beats Hilltop on 9 of the 17 factors compared between the two stocks.