Financial Analysis: HANNOVER RUECK/S (HVRRY) vs. GWG (NASDAQ:GWGH)

GWG (NASDAQ:GWGH) and HANNOVER RUECK/S (OTCMKTS:HVRRY) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, earnings, institutional ownership, dividends, valuation and risk.

Insider & Institutional Ownership

2.4% of GWG shares are owned by institutional investors. Comparatively, 0.2% of HANNOVER RUECK/S shares are owned by institutional investors. 13.8% of GWG shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

HANNOVER RUECK/S pays an annual dividend of $1.51 per share and has a dividend yield of 2.0%. GWG does not pay a dividend. HANNOVER RUECK/S pays out 33.6% of its earnings in the form of a dividend.

Risk & Volatility

GWG has a beta of 0.13, suggesting that its share price is 87% less volatile than the S&P 500. Comparatively, HANNOVER RUECK/S has a beta of 0.82, suggesting that its share price is 18% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations for GWG and HANNOVER RUECK/S, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
GWG 0 0 1 0 3.00
HANNOVER RUECK/S 0 0 0 0 N/A

GWG currently has a consensus target price of $14.00, suggesting a potential upside of 23.35%. Given GWG’s higher probable upside, equities research analysts clearly believe GWG is more favorable than HANNOVER RUECK/S.

Profitability

This table compares GWG and HANNOVER RUECK/S’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
GWG -41.79% -54.63% 3.44%
HANNOVER RUECK/S 6.32% 12.87% 1.86%

Earnings & Valuation

This table compares GWG and HANNOVER RUECK/S’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
GWG $64.13 million 1.06 -$20.63 million $3.16 3.59
HANNOVER RUECK/S $19.66 billion 0.92 $1.08 billion $4.49 16.75

HANNOVER RUECK/S has higher revenue and earnings than GWG. GWG is trading at a lower price-to-earnings ratio than HANNOVER RUECK/S, indicating that it is currently the more affordable of the two stocks.

Summary

HANNOVER RUECK/S beats GWG on 8 of the 15 factors compared between the two stocks.

About GWG

GWG Holdings, Inc. operates as a financial services company. It purchases life insurance policies at a discount to the face value from the secondary market and policy holders, and continue to pay the premiums to collect the policy benefits. The company also owns a portfolio of alternative assets; and develops epigenetic technology solutions for the life insurance industry. In addition, it operates a digital life insurance agency. As of September 30, 2018, the company owns 1,087 life insurance policies. GWG Holdings, Inc. was founded in 2006 and is headquartered in Minneapolis, Minnesota.

About HANNOVER RUECK/S

Hannover Rück SE, together with its subsidiaries, provides reinsurance products and services worldwide. It operates through Property & Casualty Reinsurance, and Life & Health Reinsurance segments. The Property & Casualty Reinsurance segment offers specialty lines comprising marine, aviation, facultative, credit, surety, and political risks reinsurance products; and treaty, catastrophe XL, and structured reinsurance, as well as insurance-linked securities. This segment also provides risk solutions for casualty and property, as well as for agricultural, livestock, and bloodstock businesses; aviation and space business; and marine and offshore energy business. The Life & Health Reinsurance segment offers, enhanced annuities, group life and health, guaranteed simplified issue, 60+, and Sharia-compliant Takaful reinsurance products, as well as micro insurance products. This segment also provides risk solutions in the areas of critical illness, disability, health, longevity, long term care, and mortality. In addition, it offers various financial solutions, including new-business financing; monetization of embedded value; reserve and solvency relief; and divestiture of non-core businesses. The company was formerly known as Hannover Rückversicherung AG and changed its name to Hannover Rück SE in March 2013. The company was founded in 1966 and is based in Hanover, Germany. Hannover Rück SE is a subsidiary of Talanx AG.

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