Validus Holdings (NYSE: VR) and RenaissanceRe Holdings (NYSE:RNR) are both mid-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, profitability, earnings, institutional ownership, risk, analyst recommendations and valuation.

Earnings and Valuation

This table compares Validus Holdings and RenaissanceRe Holdings’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Validus Holdings $2.48 billion 1.53 $538.06 million $3.63 13.12
RenaissanceRe Holdings $1.77 billion 3.00 $710.24 million $11.74 11.25

RenaissanceRe Holdings has higher revenue, but lower earnings than Validus Holdings. RenaissanceRe Holdings is trading at a lower price-to-earnings ratio than Validus Holdings, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Validus Holdings and RenaissanceRe Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Validus Holdings 11.81% 7.75% 2.55%
RenaissanceRe Holdings 28.30% 8.49% 2.92%

Institutional & Insider Ownership

93.5% of Validus Holdings shares are held by institutional investors. Comparatively, 91.7% of RenaissanceRe Holdings shares are held by institutional investors. 2.3% of Validus Holdings shares are held by company insiders. Comparatively, 1.8% of RenaissanceRe Holdings shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Dividends

Validus Holdings pays an annual dividend of $1.52 per share and has a dividend yield of 3.2%. RenaissanceRe Holdings pays an annual dividend of $1.28 per share and has a dividend yield of 1.0%. Validus Holdings pays out 41.9% of its earnings in the form of a dividend. RenaissanceRe Holdings pays out 10.9% 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. Validus Holdings has increased its dividend for 12 consecutive years and RenaissanceRe Holdings has increased its dividend for 2 consecutive years. Validus Holdings is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Validus Holdings has a beta of 0.65, suggesting that its stock price is 35% less volatile than the S&P 500. Comparatively, RenaissanceRe Holdings has a beta of 0.65, suggesting that its stock price is 35% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Validus Holdings and RenaissanceRe Holdings, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Validus Holdings 0 3 2 0 2.40
RenaissanceRe Holdings 0 7 1 0 2.13

Validus Holdings presently has a consensus price target of $57.00, suggesting a potential upside of 19.65%. RenaissanceRe Holdings has a consensus price target of $143.85, suggesting a potential upside of 8.91%. Given Validus Holdings’ stronger consensus rating and higher probable upside, research analysts clearly believe Validus Holdings is more favorable than RenaissanceRe Holdings.

About Validus Holdings

Validus Holdings, Ltd. is a holding company. The Company operates through four segments: Validus Re, Talbot, Western World and AlphaCat. Validus Re is a Bermuda-based reinsurance segment focused treaty reinsurance. Validus Re concentrates on first-party property and other reinsurance risks. Talbot is a specialty insurance segment operating within the Lloyd’s insurance market through Syndicate 1183. The Talbot segment is focused on a range of marine and energy, political lines, commercial property, financial lines, contingency, accident and health and aviation classes of business. Western World is a specialty excess and surplus lines insurance segment operating within the United States commercial market. AlphaCat is a Bermuda-based investment advisor, managing capital from third parties and the Company in insurance linked securities and other investments in the property catastrophe reinsurance space.

About RenaissanceRe Holdings

RenaissanceRe Holdings Ltd. provides reinsurance and insurance coverages and related services to a range of customers. The Company’s products include property, casualty and specialty reinsurance and certain insurance products principally distributed through intermediaries. Its segments include Property; Casualty and Specialty, and Other category. The Property segment consisted of catastrophe and other property reinsurance and insurance written on behalf of its operating subsidiaries and certain joint ventures managed by its ventures unit. The Casualty and Specialty segment consisted of casualty and specialty reinsurance and insurance written on behalf of its operating subsidiaries and certain joint ventures managed by its ventures unit. Its Other category includes its strategic investments, investments unit, corporate expenses, capital servicing. The Casualty and Specialty segment offers certain casualty insurance products through RenaissanceRe Syndicate 1458 (Syndicate 1458).

Receive News & Ratings for Validus Holdings Ltd. Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Validus Holdings Ltd. and related companies with MarketBeat.com's FREE daily email newsletter.