Financial Analysis: RLI (NYSE:RLI) vs. Ryan Specialty (NYSE:RYAN)

RLI (NYSE:RLI) and Ryan Specialty (NYSE:RYAN) are both mid-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, analyst recommendations, valuation, institutional ownership, earnings, profitability and risk.

Analyst Ratings

This is a breakdown of current ratings and price targets for RLI and Ryan Specialty, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RLI	2	3	1	0	1.83
Ryan Specialty	1	10	8	0	2.37

RLI presently has a consensus price target of $62.00, suggesting a potential upside of 7.64%. Ryan Specialty has a consensus price target of $52.21, suggesting a potential upside of 37.42%. Given Ryan Specialty’s stronger consensus rating and higher possible upside, analysts clearly believe Ryan Specialty is more favorable than RLI.

Earnings & Valuation

This table compares RLI and Ryan Specialty”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
RLI	$1.88 billion	2.81	$403.34 million	$4.76	12.10
Ryan Specialty	$3.05 billion	3.19	$63.40 million	$0.72	52.77

RLI has higher earnings, but lower revenue than Ryan Specialty. RLI is trading at a lower price-to-earnings ratio than Ryan Specialty, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

RLI has a beta of 0.36, indicating that its stock price is 64% less volatile than the S&P 500. Comparatively, Ryan Specialty has a beta of 0.61, indicating that its stock price is 39% less volatile than the S&P 500.

Dividends

RLI pays an annual dividend of $0.72 per share and has a dividend yield of 1.3%. Ryan Specialty pays an annual dividend of $0.52 per share and has a dividend yield of 1.4%. RLI pays out 15.1% of its earnings in the form of a dividend. Ryan Specialty pays out 72.2% 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. RLI has raised its dividend for 51 consecutive years and Ryan Specialty has raised its dividend for 1 consecutive years.

Institutional and Insider Ownership

77.9% of RLI shares are held by institutional investors. Comparatively, 84.8% of Ryan Specialty shares are held by institutional investors. 2.4% of RLI shares are held by insiders. Comparatively, 52.0% of Ryan Specialty shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares RLI and Ryan Specialty’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
RLI	22.22%	17.61%	5.03%
Ryan Specialty	7.55%	43.97%	4.78%

Summary

Ryan Specialty beats RLI on 11 of the 17 factors compared between the two stocks.

About RLI

RLI Corp., an insurance holding company, underwrites property and casualty insurance. 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, and mercantile. It also offers coverages for security guards and environmental liability for underground storage tanks, contractors and asbestos, and environmental remediation specialists; and professional liability coverages for errors and omission coverage for small to medium-sized design, technical, computer, and miscellaneous professionals. This segment provides commercial automobile liability and physical damage insurance to local, intermediate and long haul truckers, public transportation entities, and other types of specialty commercial automobile risks; incidental and related insurance coverages; inland marine coverages; management liability coverages, such as directors and officers liability insurance, fiduciary liability and coverages, employment practice liability, and for various classes of risks, including public and private businesses; and home business insurance products. The company's Property segment offers commercial property, cargo, hull, protection and indemnity, marine liability, inland marine, homeowners' and dwelling fire, and other property insurance products. Its Surety segment offers commercial surety bonds for medium to large-sized businesses; small bonds for businesses and individuals; and bonds for small to medium-sized contractors. The company also engages in various reinsurance coverages. It markets its products through branch offices, wholesale and retail brokers, carrier partners, and underwriting and independent agents. RLI Corp. was incorporated in 1965 and is headquartered in Peoria, Illinois.

About Ryan Specialty

Ryan Specialty Holdings, Inc. operates as a service provider of specialty products and solutions for insurance brokers, agents, and carriers in the United States, Canada, the United Kingdom, Europe, and Singapore. It offers distribution, underwriting, product development, administration, and risk management services by acting as a wholesale broker and a managing underwriter. The company serves commercial, industrial, institutional, and government sectors. Ryan Specialty Holdings, Inc. was founded in 2010 and is headquartered in Chicago, Illinois.