The Hartford Financial Services Group, Inc. (NYSE:HIG) and The Progressive Corporation (NYSE:PGR) are both Financial companies that recently hit new low. The recent price action of these companies has left many investors wondering what actions to take. To determine if one is a better investment than the other, we will compare the two names across various metrics, including growth, profitability, risk, return, dividends, and valuation.
The Hartford Financial Services Group, Inc. (NYSE:HIG) operates in the Property & Casualty Insurance segment of the Financial sector. The company has grown sales at a -3.50% annual rate over the past five years, putting it in the low growth category. HIG has a net profit margin of 3.70% and is more profitable than the average company in the Property & Casualty Insurance industry. In terms of efficiency, HIG has an asset turnover ratio of 0.09. This figure represents the amount of revenue a company generates per dollar of assets. HIG’s financial leverage ratio is 12.01, which indicates that the company’s asset base is primarily funded by debt. Company’s return on equity, which is really just the product of the company’s profit margin, asset turnover, and financial leverage ratios, is 4.10%, which is better than the Property & Casualty Insurance industry average ROE.
The Hartford Financial Services Group, Inc. (HIG) pays out an annual dividend of 1.00 per share. At the current valuation, this equates to a dividend yield of 1.83%. The company has a payout ratio of 49.10%. HIG’s current dividend therefore should be sustainable. Stock’s free cash flow yield, which represents the amount of cash available to investors before dividends, expressed as a percentage of the stock price, is 0. All else equal, companies with higher FCF yields are viewed as cheaper. Company trades at a P/E ratio of 41.56, and is less expensive than the average stock in the Property & Casualty Insurance industry. The average investment recommendation for HIG, taken from a group of Wall Street Analysts, is 2.50, or a hold.
Over the past three months, The Hartford Financial Services Group, Inc. insiders have been net buyers, dumping a net of 0 shares. This implies that insiders have been feeling relatively bearish about the outlook for HIG. Insider activity and sentiment signals are important to monitor because they can shed light on how “risky” a stock is perceived to be at it’s current valuation. Knowing this, it makes sense to look at beta, a measure of market risk. HIG has a beta of 0.96 and therefore an below average level of market volatility.
The Progressive Corporation (NYSE:PGR) operates in the Property & Casualty Insurance segment of the Financial sector. PGR has increased sales at a 8.20% CAGR over the past five years, and is considered a medium growth stock. The company has a net profit margin of 5.10% and is more profitable than the average Property & Casualty Insurance player. PGR’s asset turnover ratio is 0.72 and the company has financial leverage of 3.19. PGR’s return on equity of 15.80% is better than the Property & Casualty Insurance industry average.
The Progressive Corporation (PGR) pays a dividend of 1.13, which translates to dividend yield of 2.00% based on the current price. Stock has a payout ratio of 37.50%. According to this ratio, PGR should be able to continue making payouts at these levels. The company trades at a free cash flow yield of 0 and has a P/E of 20.66. Compared to the average company in the 15.61 space, PGR is relatively expensive. The average analyst recommendation for PGR is 2.40, or a buy. The average analyst recommendation for PGR is 2.40, or a buy.
The Progressive Corporation insiders have sold a net of -219,683 shares during the past three months, which implies that the company’s top executives have been feeling bearish about the stock’s outlook. Finally, PGR’s beta of 0.79 indicates that the stock has an below average level of market risk.
The Hartford Financial Services Group, Inc. (NYSE:PGR) scores higher than The Progressive Corporation (NYSE:HIG) on 11 of the 13 measures compared between the two companies. PGR has the better fundamentals, scoring higher on growth, profitability, efficiency, leverage and return metrics. PGR’s dividend is more attractive.