Reviewing Selective Insurance Group (SIGI) & CNA Financial Corporation (CNA)

Selective Insurance Group (NASDAQ: SIGI) and CNA Financial Corporation (NYSE:CNA) are both mid-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, dividends, profitability, valuation and earnings.

Profitability

This table compares Selective Insurance Group and CNA Financial Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Selective Insurance Group 7.13% 10.82% 2.32%
CNA Financial Corporation 11.72% 8.40% 1.80%

Risk & Volatility

Selective Insurance Group has a beta of 1.44, suggesting that its stock price is 44% more volatile than the S&P 500. Comparatively, CNA Financial Corporation has a beta of 1.25, suggesting that its stock price is 25% more volatile than the S&P 500.

Insider & Institutional Ownership

77.7% of Selective Insurance Group shares are held by institutional investors. Comparatively, 99.6% of CNA Financial Corporation shares are held by institutional investors. 3.0% of Selective Insurance Group shares are held by insiders. Comparatively, 0.5% of CNA Financial Corporation shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Selective Insurance Group and CNA Financial Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Selective Insurance Group 0 4 0 0 2.00
CNA Financial Corporation 0 3 0 0 2.00

Selective Insurance Group currently has a consensus target price of $46.91, suggesting a potential downside of 14.39%. CNA Financial Corporation has a consensus target price of $45.00, suggesting a potential downside of 11.12%. Given CNA Financial Corporation’s higher probable upside, analysts plainly believe CNA Financial Corporation is more favorable than Selective Insurance Group.

Valuation & Earnings

This table compares Selective Insurance Group 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
Selective Insurance Group $2.38 billion 1.34 $313.01 million $2.88 19.03
CNA Financial Corporation $9.52 billion 1.44 $1.75 billion $4.11 12.32

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

Dividends

Selective Insurance Group pays an annual dividend of $0.64 per share and has a dividend yield of 1.2%. CNA Financial Corporation pays an annual dividend of $1.20 per share and has a dividend yield of 2.4%. Selective Insurance Group pays out 22.2% of its earnings in the form of a dividend. CNA Financial Corporation pays out 29.2% 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.

Summary

CNA Financial Corporation beats Selective Insurance Group on 8 of the 14 factors compared between the two stocks.

Selective Insurance Group Company Profile

Selective Insurance Group, Inc. is a holding company. As of December 31, 2016, the Company had 10 insurance subsidiaries, nine of which were licensed by various state departments of insurance to write specific lines of property and casualty insurance business. The remaining subsidiary is authorized by various state insurance departments to write property and casualty insurance in the excess and surplus lines (E&S) market. Its segments include Standard Commercial Lines, which consists of insurance products and services provided in the standard marketplace; Standard Personal Lines, which consists of insurance products and services, including flood insurance coverage that it writes through the National Flood Insurance Program (NFIP); E&S Lines, which consists of insurance products and services provided to customers not obtaining coverage in the standard marketplace, and investment segment invests insurance premiums, as well as amounts generated through its capital management strategies.

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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