Analyzing Mercury General (NYSE:MCY) and Loews (NYSE:L)

Mercury General (NYSE:MCY) and Loews (NYSE:L) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their dividends, institutional ownership, profitability, earnings, analyst recommendations, valuation and risk.

Institutional and Insider Ownership

42.4% of Mercury General shares are held by institutional investors. Comparatively, 58.3% of Loews shares are held by institutional investors. 35.5% of Mercury General shares are held by insiders. Comparatively, 18.7% of Loews shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Mercury General and Loews, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mercury General	0	0	0	0	0.00
Loews	0	0	1	0	3.00

Loews has a consensus price target of $112.00, suggesting a potential upside of 29.66%. Given Loews’ stronger consensus rating and higher probable upside, analysts clearly believe Loews is more favorable than Mercury General.

Profitability

This table compares Mercury General and Loews’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Mercury General	10.18%	18.04%	3.96%
Loews	9.71%	9.70%	2.06%

Risk and Volatility

Mercury General has a beta of 0.87, suggesting that its stock price is 13% less volatile than the S&P 500. Comparatively, Loews has a beta of 0.83, suggesting that its stock price is 17% less volatile than the S&P 500.

Earnings and Valuation

This table compares Mercury General and Loews”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mercury General	$5.48 billion	0.51	$96.34 million	$10.09	4.97
Loews	$15.90 billion	1.18	$1.43 billion	$7.53	11.47

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

Dividends

Mercury General pays an annual dividend of $1.27 per share and has a dividend yield of 2.5%. Loews pays an annual dividend of $0.25 per share and has a dividend yield of 0.3%. Mercury General pays out 12.6% of its earnings in the form of a dividend. Loews pays out 3.3% 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

Loews beats Mercury General on 9 of the 16 factors compared between the two stocks.

About Mercury General

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, and umbrella insurance products. Its automobile insurance products include collision, property damage, bodily injury, comprehensive, personal injury protection, underinsured and uninsured motorist, and other hazards; and homeowners insurance products comprise dwelling, liability, personal property, and other coverages. The company sells its policies through a network of independent agents, insurance agencies, as well as directly through internet sales portals in Arizona, California, Florida, Georgia, Illinois, Nevada, New Jersey, New York, Oklahoma, Texas, and Virginia. Mercury General Corporation was founded in 1961 and is headquartered in Los Angeles, California.

About Loews

Loews Corporation provides commercial property and casualty insurance in the United States and internationally. The company offers specialty insurance products, such as management and professional liability, and other coverage products; surety and fidelity bonds; property insurance products that include standard and excess property, marine and boiler, and machinery coverages; and casualty insurance products, such as workers' compensation, general and product liability, and commercial auto, surplus, and umbrella coverages. It also provides loss-sensitive insurance programs; and warranty, risk management, information, and claims administration services. The company markets its insurance products and services through independent agents, brokers, and managing general underwriters. In addition, the company is involved in the transportation and storage of natural gas and natural gas liquids, and hydrocarbons through natural gas pipelines covering approximately 13,455 miles of interconnected pipelines; 855 miles of NGL pipelines in Louisiana and Texas; 14 underground storage fields with an aggregate gas capacity of approximately 199.5 billion cubic feet of natural gas; and eleven salt dome caverns and related brine infrastructure for providing brine supply services. Further, the company operates a chain of 25 hotels; and develops, manufactures, and markets a range of extrusion blow-molded and injection molded plastic containers for customers in the pharmaceutical, dairy, household chemicals, food/nutraceuticals, industrial/specialty chemicals, and water and beverage/juice industries, as well as manufactures commodity and differentiated plastic resins from recycled plastic materials. Loews Corporation was incorporated in 1969 and is headquartered in New York, New York.