Financial Analysis: ProAssurance (PRA) versus National Interstate (NATL)

ProAssurance (NYSE: PRA) and National Interstate (NASDAQ:NATL) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, risk, earnings, dividends, institutional ownership, valuation and profitability.

Dividends

ProAssurance pays an annual dividend of $1.24 per share and has a dividend yield of 2.2%. National Interstate pays an annual dividend of $0.56 per share and has a dividend yield of 1.7%. ProAssurance pays out 46.1% of its earnings in the form of a dividend. National Interstate pays out 40.6% 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.

Earnings and Valuation

This table compares ProAssurance and National Interstate’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
ProAssurance $870.21 million 3.48 $151.08 million $2.69 21.08
National Interstate N/A N/A N/A $1.38 23.56

ProAssurance has higher revenue and earnings than National Interstate. ProAssurance is trading at a lower price-to-earnings ratio than National Interstate, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares ProAssurance and National Interstate’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ProAssurance 16.18% 6.75% 2.50%
National Interstate 5.91% 10.13% 1.94%

Insider and Institutional Ownership

80.2% of ProAssurance shares are owned by institutional investors. Comparatively, 84.9% of National Interstate shares are owned by institutional investors. 1.8% of ProAssurance shares are owned by company insiders. Comparatively, 11.8% of National Interstate shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of recent recommendations for ProAssurance and National Interstate, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ProAssurance 0 4 0 0 2.00
National Interstate 0 0 0 0 N/A

ProAssurance presently has a consensus target price of $58.33, suggesting a potential upside of 2.88%. Given ProAssurance’s higher possible upside, equities analysts clearly believe ProAssurance is more favorable than National Interstate.

Summary

ProAssurance beats National Interstate on 6 of the 10 factors compared between the two stocks.

About ProAssurance

ProAssurance Corporation (ProAssurance) is a holding company for property and casualty insurance companies. The Company provides professional liability insurance for healthcare professionals and facilities, professional liability insurance for attorneys, liability insurance for medical technology and life sciences risks, and workers’ compensation insurance. The Company operates through four segments. The Specialty property and casualty segment includes the Company’s professional liability business, and medical technology and life sciences business. The Workers’ compensation segment includes its workers’ compensation business. Lloyd’s Syndicate 1729 (Syndicate 1729) segment includes business of Syndicate 1729, which underwrites risks over a range of property and casualty insurance and reinsurance lines. The Corporate segment includes the Company’s investment operations managed at the corporate level and non-premium revenues generated outside of its insurance entities.

About National Interstate

National Interstate Corporation and its subsidiaries operate as an insurance holding company that underwrites and sells traditional and alternative property and casualty insurance products to the passenger transportation, trucking and moving and storage industries, general commercial insurance to small businesses in Hawaii and Alaska and personal insurance to owners of recreational vehicles throughout the United States. The Company is a specialty property and casualty insurance company with a focus on the transportation industry. The Company operates through property and casualty insurance segment. The Company offers approximately 40 product lines in the specialty property and casualty insurance market, which it groups into approximately four general business components: alternative risk transfer (ART), transportation, specialty personal lines, and Hawaii and Alaska based on the class of business, insureds’ risk participation or geographic location.

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