Contrasting Navigators Group (NASDAQ:NAVG) and Mercury General (MCY)

Mercury General (NYSE: MCY) and Navigators Group (NASDAQ:NAVG) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, analyst recommendations, profitability, institutional ownership, valuation, risk and dividends.

Profitability

This table compares Mercury General and Navigators Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Mercury General 2.48% 5.44% 1.84%
Navigators Group 4.44% 4.52% 1.04%

Risk and Volatility

Mercury General has a beta of 0.54, indicating that its share price is 46% less volatile than the S&P 500. Comparatively, Navigators Group has a beta of 0.55, indicating that its share price is 45% less volatile than the S&P 500.

Insider and Institutional Ownership

44.0% of Mercury General shares are held by institutional investors. Comparatively, 74.4% of Navigators Group shares are held by institutional investors. 34.2% of Mercury General shares are held by company insiders. Comparatively, 22.0% of Navigators Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Mercury General and Navigators Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Mercury General 0 0 0 0 N/A
Navigators Group 0 3 0 0 2.00

Navigators Group has a consensus price target of $61.00, suggesting a potential downside of 0.16%. Given Navigators Group’s higher probable upside, analysts plainly believe Navigators Group is more favorable than Mercury General.

Earnings and Valuation

This table compares Mercury General and Navigators Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Mercury General $3.42 billion 0.85 $144.87 million $1.64 31.93
Navigators Group $1.31 billion 1.38 $40.49 million $1.16 52.67

Mercury General has higher revenue and earnings than Navigators Group. Mercury General is trading at a lower price-to-earnings ratio than Navigators Group, indicating that it is currently the more affordable of the two stocks.

Dividends

Mercury General pays an annual dividend of $2.50 per share and has a dividend yield of 4.8%. Navigators Group pays an annual dividend of $0.28 per share and has a dividend yield of 0.5%. Mercury General pays out 152.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Navigators Group pays out 24.1% of its earnings in the form of a dividend. Mercury General has increased its dividend for 32 consecutive years. Mercury General is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Mercury General beats Navigators Group on 8 of the 15 factors compared between the two stocks.

About Mercury General

Mercury General Corporation, together with its subsidiaries, engages in writing personal automobile insurance in the United States. The company also writes homeowners, commercial automobile, commercial property, mechanical protection, fire, and umbrella insurance. Its automobile insurance products cover collision, property damage, bodily injury, comprehensive, personal injury protection, underinsured and uninsured motorist, and other hazards; and homeowners insurance products cover dwelling, liability, personal property, fire, and other hazards. The company sells its policies through a network of independent agents, 100% owned insurance agents, and direct channels in Arizona, California, Florida, Georgia, Illinois, Nevada, New Jersey, New York, Oklahoma, Texas, and Virginia. Mercury General Corporation was founded in 1960 and is headquartered in Los Angeles, California.

About Navigators Group

The Navigators Group, Inc., together with its subsidiaries, underwrites marine, property and casualty, and professional liability insurance products and services in the United States and internationally. The company operates through the U.S. Insurance, International Insurance, Global Reinsurance, and Corporate segments. It offers marine insurance products comprising cargo, craft, inland marine, and marine liability; fishing vessels, transport, war, hull, and other marine; and protection and indemnity, specie and fine art, craft, and energy liability insurance products. The company also provides commercial retail excess casualty and specialty wholesale excess casualty; general liability; contractors pollution liability, site pollution liability, and integrated casualty; auto, property, life sciences, surety, media, arts and entertainment, and other property and casualty; onshore and offshore energy, and other energy and engineering; and political violence and terrorism insurance products. In addition, it offers directors and officers; architects and engineers, accountants, miscellaneous professional liability, real estate errors and omissions (E&O), and other E&O; and warranties and indemnity insurance products. Further, the company offers accident and health, marine, property and casualty, professional, management liability, auto, general liability, agriculture, surety, and other reinsurance products. The Navigators Group, Inc. distributes its products through international, national, and regional retail and wholesale insurance brokers. The company was founded in 1982 and is headquartered in Stamford, Connecticut.

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