Head-To-Head Analysis: Waterdrop (NYSE:WDH) versus Palomar (NASDAQ:PLMR)

Palomar (NASDAQ:PLMR) and Waterdrop (NYSE:WDH) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their risk, valuation, analyst recommendations, earnings, profitability, institutional ownership and dividends.

Dividends

Palomar pays an annual dividend of $1.80 per share and has a dividend yield of 1.1%. Waterdrop pays an annual dividend of $0.04 per share and has a dividend yield of 4.0%. Palomar pays out 22.5% of its earnings in the form of a dividend. Waterdrop pays out 19.0% 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. Waterdrop is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of recent ratings and price targets for Palomar and Waterdrop, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Palomar	0	1	6	0	2.86
Waterdrop	0	1	0	0	2.00

Palomar presently has a consensus price target of $165.80, indicating a potential upside of 2.78%. Given Palomar’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Palomar is more favorable than Waterdrop.

Insider and Institutional Ownership

90.2% of Palomar shares are owned by institutional investors. Comparatively, 2.0% of Waterdrop shares are owned by institutional investors. 3.7% of Palomar shares are owned by insiders. Comparatively, 24.6% of Waterdrop shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Volatility & Risk

Palomar has a beta of 0.28, meaning that its share price is 72% less volatile than the S&P 500. Comparatively, Waterdrop has a beta of -0.17, meaning that its share price is 117% less volatile than the S&P 500.

Profitability

This table compares Palomar and Waterdrop’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Palomar	17.60%	25.27%	6.60%
Waterdrop	10.69%	10.47%	7.40%

Earnings & Valuation

This table compares Palomar and Waterdrop”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Palomar	$875.97 million	4.84	$197.07 million	$7.99	20.19
Waterdrop	$5.08 billion	0.07	$81.36 million	$0.21	4.73

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

Summary

Palomar beats Waterdrop on 11 of the 16 factors compared between the two stocks.

About Palomar

Palomar Holdings, Inc. is a specialty property insurer that provides coverage for risks that can be difficult to insure through standard policies. Its offerings include earthquake, hurricane, flood and wildfire insurance, along with specialty homeowners and commercial property coverage. The company distributes its products through a network of agents, brokers and other partners, serving customers in the United States. Its business has grown from an initial focus on earthquake insurance into a broader range of specialty insurance markets.

About Waterdrop

Waterdrop Inc. is a China-focused technology platform that connects consumers with insurance products and medical fundraising services. Its insurance business distributes policies from third-party insurers through online channels, including coverage for health, life and accidents. The company also operates Waterdrop Medical Crowdfunding, a platform through which people can seek donations to help cover medical expenses. Waterdrop was founded in 2016 by Shen Peng, who has served as the company’s chairman and chief executive officer.