Financial Analysis: Greenlight Capital Re (NASDAQ:GLRE) versus Brown & Brown (NYSE:BRO)

Greenlight Capital Re (NASDAQ:GLRE) and Brown & Brown (NYSE:BRO) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, dividends, risk, institutional ownership, profitability, analyst recommendations and valuation.

Profitability

This table compares Greenlight Capital Re and Brown & Brown’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Greenlight Capital Re	8.56%	8.26%	2.62%
Brown & Brown	17.63%	13.29%	5.63%

Insider and Institutional Ownership

41.5% of Greenlight Capital Re shares are held by institutional investors. Comparatively, 71.0% of Brown & Brown shares are held by institutional investors. 24.7% of Greenlight Capital Re shares are held by insiders. Comparatively, 13.1% of Brown & Brown shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Greenlight Capital Re and Brown & Brown”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Greenlight Capital Re	$729.78 million	0.71	$74.83 million	$1.70	9.40
Brown & Brown	$6.81 billion	3.46	$1.05 billion	$3.16	22.50

Brown & Brown has higher revenue and earnings than Greenlight Capital Re. Greenlight Capital Re is trading at a lower price-to-earnings ratio than Brown & Brown, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Greenlight Capital Re has a beta of 0.28, indicating that its share price is 72% less volatile than the S&P 500. Comparatively, Brown & Brown has a beta of 0.52, indicating that its share price is 48% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations and price targets for Greenlight Capital Re and Brown & Brown, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Greenlight Capital Re	0	1	1	0	2.50
Brown & Brown	1	13	6	1	2.33

Brown & Brown has a consensus target price of $75.47, suggesting a potential upside of 6.13%. Given Brown & Brown’s higher possible upside, analysts plainly believe Brown & Brown is more favorable than Greenlight Capital Re.

Summary

Brown & Brown beats Greenlight Capital Re on 13 of the 15 factors compared between the two stocks.

About Greenlight Capital Re

Greenlight Capital Re, Ltd., through its subsidiaries, operates as a property and casualty reinsurance company worldwide. The company offers various property reinsurance products and services, including automobile physical damage, personal lines, and commercial lines. It also provides casualty reinsurance products and services comprising general liability, motor liability, professional liability, and worker's compensation; and accident and health, transactional liability, mortgage insurance, surety, trade credit, marine, and energy, as well as other specialty products, such as aviation, crop, cyber, political, and terrorism products. The company markets its products through reinsurance brokers. Greenlight Capital Re, Ltd. was incorporated in 2004 and is headquartered in Grand Cayman, the Cayman Islands.

About Brown & Brown

Brown & Brown, Inc. is an insurance agency, wholesale brokerage, insurance program and service organization. It engages in the provision of insurance brokerage services and casualty insurance underwriting services. It operates through the following segments: Retail, National Programs, Wholesale Brokerage, and Services. The Retail Segment receives fees in lieu of commissions. The National Programs segment acts as a managing general agent and provides professional liability and related package products for certain professionals, a range of insurance products for individuals, flood coverage, and targeted products and services designated for specific industries, trade groups, governmental entities and market niches. The Wholesale Brokerage segment markets and sells excess and surplus commercial and personal lines insurance, primarily through independent agents and brokers, as well as the company’s retail agents. The Services segment provides insurance-related services, including third-party claims administration and comprehensive medical utilization management services in both the workers’ compensation and all-lines liability arenas, as well as Medicare Set-aside services, social security disability and Medicare benefits advocacy services and claims adjusting services. The company was founded by J. Adrian Brown and Charles Covington Owen in 1939 and is headquartered in Daytona Beach, FL.