Financial Contrast: National General (NGHC) versus Mercury General (MCY)
National General (NYSE: MCY) and Mercury General (NYSE:MCY) are both mid-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, risk, profitability, dividends, valuation, analyst recommendations and institutional ownership.
National General pays an annual dividend of $0.16 per share and has a dividend yield of 0.6%. Mercury General pays an annual dividend of $2.50 per share and has a dividend yield of 5.0%. National General pays out 14.7% of its earnings in the form of a dividend. 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. National General has increased its dividend for 3 consecutive years and 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.
This table compares National General and Mercury General’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|National General||$4.43 billion||0.62||$105.84 million||$1.09||23.57|
|Mercury General||$3.42 billion||0.81||$144.87 million||$1.64||30.45|
Mercury General has lower revenue, but higher earnings than National General. National General is trading at a lower price-to-earnings ratio than Mercury General, indicating that it is currently the more affordable of the two stocks.
This table compares National General and Mercury General’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Institutional & Insider Ownership
48.4% of National General shares are owned by institutional investors. Comparatively, 47.7% of Mercury General shares are owned by institutional investors. 3.4% of National General shares are owned by company insiders. Comparatively, 34.2% of Mercury General shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Risk and Volatility
National General has a beta of 0.93, suggesting that its share price is 7% less volatile than the S&P 500. Comparatively, Mercury General has a beta of 0.56, suggesting that its share price is 44% less volatile than the S&P 500.
This is a summary of recent recommendations for National General and Mercury General, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
National General presently has a consensus price target of $30.00, suggesting a potential upside of 16.78%. Mercury General has a consensus price target of $64.00, suggesting a potential upside of 28.15%. Given Mercury General’s stronger consensus rating and higher probable upside, analysts clearly believe Mercury General is more favorable than National General.
Mercury General beats National General on 9 of the 17 factors compared between the two stocks.
National General Company Profile
National General Holdings Corp., a specialty personal lines insurance holding company, provides various insurance products and services in the United States. The company operates in two segments, Property and Casualty, and Accident and Health. The Property and Casualty segment offers standard, preferred, and nonstandard automobile insurance products; and recreational vehicle (RV) insurance products that carry RV-specific endorsements comprising automatic personal effects coverage, optional replacement cost coverage, RV storage coverage, and full-time liability coverage. It also provides homeowners policies consisting of property and liability coverages for one-and two-family, and owner-occupied residences, as well as additional personal umbrella coverage to the homeowners. In addition, this segment offers small business automobile insurance products, which covers liability and physical damage caused by light-to-medium duty commercial vehicles; motorcycle insurance products for various types of motorcycles, as well as golf carts and all-terrain vehicles; and lender-placed insurance products, including fire, home, and flood products, as well as collateral protection insurance and guaranteed asset protection products for automobiles. The Accident and Health segment provides accident and non-major medical health insurance products, such as accident/AD&D coverage in the event of bodily injury or death due to accidental means; hospital indemnity; short term coverage post discharge from acute care/rehab center to the nursing home setting; and short-term medical plans. This segment also offers cancer/critical illness policies, stop loss programs for small and large employers, and basic dental and vision coverage products. In addition, it distributes life and health insurance to groups and individuals. The company was formerly known as American Capital Acquisition Corporation. National General Holdings Corp. was founded in 1939 and is headquartered in New York, New York.
Mercury General Company Profile
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.
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