James River Group Holdings (NASDAQ: JRVR) and CNA Financial Corporation (NYSE:CNA) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their profitability, institutional ownership, valuation, dividends, risk, analyst recommendations and earnings.

Profitability

This table compares James River Group Holdings and CNA Financial Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
James River Group Holdings 11.45% 10.80% 3.21%
CNA Financial Corporation 11.72% 8.40% 1.80%

Institutional & Insider Ownership

94.6% of James River Group Holdings shares are held by institutional investors. Comparatively, 99.6% of CNA Financial Corporation shares are held by institutional investors. 41.0% of James River Group Holdings shares are held by insiders. Comparatively, 0.5% of CNA Financial Corporation shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and recommmendations for James River Group Holdings and CNA Financial Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
James River Group Holdings 0 1 2 0 2.67
CNA Financial Corporation 0 3 0 0 2.00

James River Group Holdings presently has a consensus target price of $44.00, suggesting a potential upside of 9.45%. CNA Financial Corporation has a consensus target price of $45.00, suggesting a potential downside of 14.64%. Given James River Group Holdings’ stronger consensus rating and higher possible upside, analysts clearly believe James River Group Holdings is more favorable than CNA Financial Corporation.

Dividends

James River Group Holdings pays an annual dividend of $1.20 per share and has a dividend yield of 3.0%. CNA Financial Corporation pays an annual dividend of $1.00 per share and has a dividend yield of 1.9%. James River Group Holdings pays out 45.3% of its earnings in the form of a dividend. CNA Financial Corporation pays out 24.3% 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.

Valuation & Earnings

This table compares James River Group Holdings and CNA Financial Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
James River Group Holdings $699.18 million 1.69 $97.44 million $2.65 15.17
CNA Financial Corporation $9.52 billion 1.50 $1.75 billion $4.11 12.83

CNA Financial Corporation has higher revenue and earnings than James River Group Holdings. CNA Financial Corporation is trading at a lower price-to-earnings ratio than James River Group Holdings, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

James River Group Holdings has a beta of 0.55, indicating that its stock price is 45% less volatile than the S&P 500. Comparatively, CNA Financial Corporation has a beta of 1.23, indicating that its stock price is 23% more volatile than the S&P 500.

Summary

James River Group Holdings beats CNA Financial Corporation on 9 of the 16 factors compared between the two stocks.

James River Group Holdings Company Profile

James River Group Holdings, Ltd. (JRG Holdings) is an insurance and reinsurance holding company. The Company operates through four segments: Excess and Surplus Lines, Specialty Admitted Insurance, Casualty Reinsurance, and Corporate and Other. The Excess and Surplus Lines segment offers commercial excess and surplus lines liability and excess property insurance products. The Specialty Admitted Insurance segment offers workers’ compensation insurance coverage, as well as specialty admitted fronting and program business. The Casualty Reinsurance segment offers commercial liability and non-catastrophe property reinsurance to the United States insurance companies and to its the United States-based insurance subsidiaries. The Corporate and Other segment consists of certain management and treasury activities of James River Group, Inc., James River Group Holdings UK Limited and JRG Holdings. It owns six insurance companies focused on specialty insurance niches and a reinsurance company.

CNA Financial Corporation Company Profile

CNA Financial Corporation is an insurance holding company. The Company’s segments include Specialty, Commercial, International, Life & Group Non-Core, and Corporate & Other Non-Core. Its Specialty segment provides a range of professional, financial, and specialty property, and casualty products and services. The Commercial segment includes property and casualty insurance products and services to small, middle-market and large businesses. Its International segment provides management and professional liability coverages, as well as a range of other property and casualty insurance products and services. The Life & Group Non-Core segment primarily includes the results of its individual and group long term care businesses that are in run-off. Its Corporate & Other Non-Core segment primarily includes certain corporate expenses, including interest on corporate debt, and the results of certain property and casualty business in run-off.

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