Erie Indemnity (NASDAQ: ERIE) and The Travelers Companies (NYSE:TRV) are both large-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their analyst recommendations, profitability, risk, valuation, earnings, institutional ownership and dividends.
Volatility & Risk
Erie Indemnity has a beta of 0.45, suggesting that its stock price is 55% less volatile than the S&P 500. Comparatively, The Travelers Companies has a beta of 1.26, suggesting that its stock price is 26% more volatile than the S&P 500.
This is a summary of current 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|
|The Travelers Companies||4||6||7||0||2.18|
The Travelers Companies has a consensus price target of $127.56, suggesting a potential downside of 4.32%. Given The Travelers Companies’ higher possible upside, analysts clearly believe The Travelers Companies is more favorable than Erie Indemnity.
Institutional and Insider Ownership
30.8% of Erie Indemnity shares are owned by institutional investors. Comparatively, 78.3% of The Travelers Companies shares are owned by institutional investors. 46.8% of Erie Indemnity shares are owned by insiders. Comparatively, 0.8% of The Travelers Companies shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
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|
|The Travelers Companies||8.56%||9.87%||2.28%|
Valuation & Earnings
This table compares Erie Indemnity and The Travelers Companies’ revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|Erie Indemnity||$1.60 billion||3.55||$210.36 million||$4.02||30.55|
|The Travelers Companies||$27.63 billion||1.32||$3.01 billion||$8.61||15.48|
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.
Erie Indemnity pays an annual dividend of $3.13 per share and has a dividend yield of 2.5%. The Travelers Companies pays an annual dividend of $2.88 per share and has a dividend yield of 2.2%. Erie Indemnity pays out 77.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. The Travelers Companies pays out 33.4% of its earnings in the form of a dividend. Erie Indemnity has increased its dividend for 21 consecutive years and The Travelers Companies has increased its dividend for 8 consecutive years. Erie Indemnity is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Erie Indemnity Company Profile
Erie Indemnity Company is a management company. The Company serves as the attorney-in-fact for the subscribers (policyholders) at the Erie Insurance Exchange (Exchange). The Exchange is a reciprocal insurer that writes property and casualty insurance. The Company’s function is to perform certain services for the Exchange relating to the sales, underwriting and issuance of policies on behalf of the Exchange. The sales related services the Company provides include agent compensation, and certain sales and advertising support services. Agent compensation includes scheduled commissions to agents based upon premiums written, as well as additional commissions and bonuses to agents. The underwriting services the Company provides include underwriting and policy processing expenses. It provides information technology services that supports various functions. The remaining services the Company provides include customer service and administrative costs.
The Travelers Companies Company Profile
The Travelers Companies, Inc. is a holding company. The Company’s segments include Business and International Insurance; Bond & Specialty Insurance, and Personal Insurance. Through its subsidiaries, it provides commercial and personal property and casualty insurance products and services. The Business and International Insurance segment offers property and casualty insurance and insurance related services to its clients, in the United States and in Canada, as well as in the United Kingdom, the Republic of Ireland, Brazil and throughout other parts of the world. The Bond & Specialty Insurance segment provides surety, fidelity, management liability, professional liability, and other property and casualty coverages and related risk management services to a range of primarily domestic customers, utilizing various degrees of financially-based underwriting approaches. The Personal Insurance segment writes a range of property and casualty insurance covering individuals’ personal risks.
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