Selective Insurance Group (SIGI) versus White Mountains Insurance Group (WTM) Critical Analysis

Selective Insurance Group (NASDAQ: SIGI) and White Mountains Insurance Group (NYSE:WTM) are both mid-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, dividends, valuation, risk, profitability and institutional ownership.

Insider and Institutional Ownership

77.8% of Selective Insurance Group shares are owned by institutional investors. Comparatively, 81.9% of White Mountains Insurance Group shares are owned by institutional investors. 3.0% of Selective Insurance Group shares are owned by company insiders. Comparatively, 5.1% of White Mountains Insurance Group shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Risk and Volatility

Selective Insurance Group has a beta of 1.45, meaning that its stock price is 45% more volatile than the S&P 500. Comparatively, White Mountains Insurance Group has a beta of 0.53, meaning that its stock price is 47% less volatile than the S&P 500.

Earnings & Valuation

This table compares Selective Insurance Group and White Mountains Insurance Group’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Selective Insurance Group $2.28 billion 1.51 $158.49 million $3.01 19.67
White Mountains Insurance Group $1.36 billion 2.39 $412.50 million $134.40 6.46

White Mountains Insurance Group has lower revenue, but higher earnings than Selective Insurance Group. White Mountains Insurance Group is trading at a lower price-to-earnings ratio than Selective Insurance Group, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Selective Insurance Group and White Mountains Insurance Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Selective Insurance Group 7.36% 11.00% 2.37%
White Mountains Insurance Group 69.96% 1.32% 0.82%

Analyst Recommendations

This is a summary of recent ratings and target prices for Selective Insurance Group and White Mountains Insurance Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Selective Insurance Group 0 4 0 0 2.00
White Mountains Insurance Group 0 0 0 0 N/A

Selective Insurance Group currently has a consensus target price of $50.91, suggesting a potential downside of 14.00%. Given Selective Insurance Group’s higher possible upside, equities research analysts plainly believe Selective Insurance Group is more favorable than White Mountains Insurance Group.

Dividends

Selective Insurance Group pays an annual dividend of $0.72 per share and has a dividend yield of 1.2%. White Mountains Insurance Group pays an annual dividend of $1.00 per share and has a dividend yield of 0.1%. Selective Insurance Group pays out 23.9% of its earnings in the form of a dividend. White Mountains Insurance Group pays out 0.7% 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.

Summary

White Mountains Insurance Group beats Selective Insurance Group on 8 of the 14 factors compared between the two stocks.

About Selective Insurance Group

Selective Insurance Group, Inc. is a holding company. As of December 31, 2016, the Company had 10 insurance subsidiaries, nine of which were licensed by various state departments of insurance to write specific lines of property and casualty insurance business. The remaining subsidiary is authorized by various state insurance departments to write property and casualty insurance in the excess and surplus lines (E&S) market. Its segments include Standard Commercial Lines, which consists of insurance products and services provided in the standard marketplace; Standard Personal Lines, which consists of insurance products and services, including flood insurance coverage that it writes through the National Flood Insurance Program (NFIP); E&S Lines, which consists of insurance products and services provided to customers not obtaining coverage in the standard marketplace, and investment segment invests insurance premiums, as well as amounts generated through its capital management strategies.

About White Mountains Insurance Group

White Mountains Insurance Group, Ltd. is a holding company. The Company’s principal businesses are conducted through its insurance subsidiaries and other affiliates. Its segments include HG Global/BAM and Other Operations. The HG Global/BAM segment consists of the operations of HG Global Ltd. (HG Global) and Build America Mutual Assurance Company (BAM). The Other Operations segment consists of the Company and its intermediate holding companies, its investment management subsidiary, White Mountains Advisors LLC, and certain consolidated and unconsolidated private capital investments.

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