Analyzing HCI Group (NYSE:HCI) and AON (NYSE:AON)

AON (NYSE:AON) and HCI Group (NYSE:HCI) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their valuation, earnings, profitability, analyst recommendations, risk, institutional ownership and dividends.

Insider & Institutional Ownership

86.1% of AON shares are owned by institutional investors. Comparatively, 87.0% of HCI Group shares are owned by institutional investors. 1.0% of AON shares are owned by company insiders. Comparatively, 18.5% of HCI Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares AON and HCI Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AON	22.27%	42.13%	7.57%
HCI Group	32.60%	28.80%	12.25%

Dividends

AON pays an annual dividend of $3.28 per share and has a dividend yield of 1.1%. HCI Group pays an annual dividend of $1.60 per share and has a dividend yield of 0.9%. AON pays out 18.1% of its earnings in the form of a dividend. HCI Group pays out 6.9% 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.

Earnings and Valuation

This table compares AON and HCI Group”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AON	$17.18 billion	3.77	$3.69 billion	$18.14	16.82
HCI Group	$900.95 million	2.56	$299.01 million	$23.20	7.98

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

Volatility & Risk

AON has a beta of 0.66, meaning that its stock price is 34% less volatile than the S&P 500. Comparatively, HCI Group has a beta of 1.03, meaning that its stock price is 3% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings for AON and HCI Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AON	1	6	12	0	2.58
HCI Group	0	2	5	0	2.71

AON currently has a consensus price target of $399.35, suggesting a potential upside of 30.88%. HCI Group has a consensus price target of $241.67, suggesting a potential upside of 30.49%. Given AON’s higher probable upside, equities analysts plainly believe AON is more favorable than HCI Group.

About AON

Aon Plc engages in the provision of risk, health, and wealth solutions. It focuses on risk capital including claim management, reinsurance, risk analysis, management, retention, and transfer; and human capital involving analytics, health and benefits, investments, pensions and retirement, talent and rewards, and workplace wellbeing. The company was founded in 1982 and is headquartered in Dublin, Ireland.

About HCI Group

HCI Group, Inc., together with its subsidiaries, engages in the property and casualty insurance, insurance management, reinsurance, real estate, and information technology businesses in Florida. It provides residential insurance products, such as homeowners, fire, flood, and wind-only insurance to homeowners, condominium owners, and tenants for properties, as well as offers reinsurance programs. The company also owns and operates waterfront properties and retail shopping centers, and an office building, as well as commercial properties for investment purposes. In addition, it designs and develops web-based applications and products for mobile devices, including SAMS, an online policy administration platform; Harmony, a policy administration platform; ClaimColony, an end-to-end claims management platform; and AtlasViewer, a mapping and data visualization platform. The company was formerly known as Homeowners Choice, Inc. and changed its name to HCI Group, Inc. in May 2013. HCI Group, Inc. was incorporated in 2006 and is headquartered in Tampa, Florida.