Analyzing EMC Insurance Group (EMCI) & RLI (RLI)

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

Earnings and Valuation

This table compares EMC Insurance Group and RLI’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
EMC Insurance Group $652.29 million 0.80 $39.23 million $1.22 19.80
RLI $797.22 million 4.11 $105.02 million $1.61 45.94

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

Volatility and Risk

EMC Insurance Group has a beta of 0.74, indicating that its stock price is 26% less volatile than the S&P 500. Comparatively, RLI has a beta of 1.22, indicating that its stock price is 22% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings for EMC Insurance Group and RLI, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
EMC Insurance Group 0 1 1 0 2.50
RLI 0 3 0 0 2.00

EMC Insurance Group presently has a consensus price target of $30.50, suggesting a potential upside of 26.24%. RLI has a consensus price target of $60.00, suggesting a potential downside of 18.88%. Given EMC Insurance Group’s stronger consensus rating and higher possible upside, analysts plainly believe EMC Insurance Group is more favorable than RLI.

Profitability

This table compares EMC Insurance Group and RLI’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
EMC Insurance Group 3.23% 3.30% 1.15%
RLI 12.91% 9.13% 2.64%

Dividends

EMC Insurance Group pays an annual dividend of $0.88 per share and has a dividend yield of 3.6%. RLI pays an annual dividend of $0.88 per share and has a dividend yield of 1.2%. EMC Insurance Group pays out 72.1% of its earnings in the form of a dividend. RLI pays out 54.7% 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. EMC Insurance Group has increased its dividend for 8 consecutive years and RLI has increased its dividend for 41 consecutive years.

Institutional & Insider Ownership

28.2% of EMC Insurance Group shares are owned by institutional investors. Comparatively, 85.8% of RLI shares are owned by institutional investors. 2.9% of EMC Insurance Group shares are owned by insiders. Comparatively, 5.5% of RLI shares are owned 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.

Summary

RLI beats EMC Insurance Group on 13 of the 17 factors compared between the two stocks.

About EMC Insurance Group

EMC Insurance Group Inc., an insurance holding company, provides property and casualty insurance, and reinsurance products in the United States. It operates through two segments, Property and Casualty Insurance, and Reinsurance. The Property and Casualty Insurance segment underwrites commercial and personal lines of insurance products. Its commercial lines of insurance products comprise automobile, property, workers' compensation, and liability, as well as other products that provide protection with respect to burglary and theft loss, aircraft, marine, and other types of losses; and personal lines of insurance products include automobile, homeowners, and umbrella policies. The Reinsurance segment provides reinsurance for other insurers and reinsurers. EMC Insurance Group Inc. offers its products to small and medium-sized businesses, institutions, and individual consumers through independent insurance agents. The company was founded in 1974 and is based in Des Moines, Iowa. EMC Insurance Group Inc. is a subsidiary of Employers Mutual Casualty Company.

About RLI

RLI Corp., an insurance holding company, underwrites property and casualty insurance in the United States and internationally. Its Casualty segment provides commercial and personal coverage products; and general liability products, such as coverage for third-party liability of commercial insureds, including manufacturers, contractors, apartments, real estate investment trusts, and mercantile. This segment also offers coverages for security guards and in the areas of onshore energy-related businesses and environmental liability for underground storage tanks, contractors and asbestos, and environmental remediation specialists; and professional liability coverages focuses on providing errors and omission coverage to small to medium-sized design, technical, computer, and miscellaneous professionals. In addition, this segment provides commercial automobile liability and physical damage insurance to local, intermediate and long haul truckers, public transportation entities, and equipment dealers; incidental, related insurance coverages; inland marine coverages; management liability coverages, such as directors and officers liability insurance, fiduciary liability and fidelity coverages, and for low to moderate classes of risks, including public and private businesses; healthcare liability coverages; and home business insurance products. The company's Property segment offers commercial property, marine, homeowners', and other property insurance products. Its Surety segment offers small bonds for businesses and individuals; bonds for small to medium-sized contractors; commercial surety bonds for medium-to-large businesses; and commercial surety bonds for the energy, petrochemical, and refining industries. The company also underwrites various reinsurance coverages. The company markets its products through branch offices and independent agents. RLI Corp. was founded in 1965 and is headquartered in Peoria, Illinois.

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