The Hartford Financial Services Group (NYSE:HIG) and Fairfax Financial (OTCMKTS:FRFHF) are both large-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, risk, institutional ownership, valuation, analyst recommendations, dividends and profitability.
Valuation & Earnings
This table compares The Hartford Financial Services Group and Fairfax Financial's gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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The Hartford Financial Services Group | $20.74 billion | 0.87 | $2.09 billion | $5.65 | 8.97 |
Fairfax Financial | $21.53 billion | 0.52 | $2.00 billion | N/A | N/A |
The Hartford Financial Services Group has higher earnings, but lower revenue than Fairfax Financial.
Insider and Institutional Ownership
90.5% of The Hartford Financial Services Group shares are owned by institutional investors. Comparatively, 0.6% of Fairfax Financial shares are owned by institutional investors. 1.7% of The Hartford Financial Services Group shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.
Volatility and Risk
The Hartford Financial Services Group has a beta of 1.05, suggesting that its share price is 5% more volatile than the S&P 500. Comparatively, Fairfax Financial has a beta of 0.86, suggesting that its share price is 14% less volatile than the S&P 500.
Profitability
This table compares The Hartford Financial Services Group and Fairfax Financial's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
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The Hartford Financial Services Group | 8.50% | 12.19% | 2.80% |
Fairfax Financial | -0.10% | -0.80% | -0.17% |
Analyst Recommendations
This is a summary of current ratings for The Hartford Financial Services Group and Fairfax Financial, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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The Hartford Financial Services Group | 0 | 2 | 12 | 0 | 2.86 |
Fairfax Financial | 0 | 2 | 2 | 0 | 2.50 |
The Hartford Financial Services Group currently has a consensus target price of $54.6429, suggesting a potential upside of 7.80%. Fairfax Financial has a consensus target price of $561.6667, suggesting a potential upside of 36.75%. Given Fairfax Financial's higher probable upside, analysts clearly believe Fairfax Financial is more favorable than The Hartford Financial Services Group.
Dividends
The Hartford Financial Services Group pays an annual dividend of $1.30 per share and has a dividend yield of 2.6%. Fairfax Financial pays an annual dividend of $10.00 per share and has a dividend yield of 2.4%. The Hartford Financial Services Group pays out 23.0% of its earnings in the form of a dividend. The Hartford Financial Services Group has increased its dividend for 1 consecutive years. The Hartford Financial Services Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Summary
The Hartford Financial Services Group beats Fairfax Financial on 13 of the 16 factors compared between the two stocks.