Reviewing HCI Group (HCI) & Axis Capital (AXS)

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HCI Group (NYSE:HCI) and Axis Capital (NYSE:AXS) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, valuation, risk, profitability, earnings and analyst recommendations.

Profitability

This table compares HCI Group and Axis Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
HCI Group 8.14% 13.68% 3.17%
Axis Capital 0.85% 4.12% 0.74%

Volatility & Risk

HCI Group has a beta of 0.86, suggesting that its share price is 14% less volatile than the S&P 500. Comparatively, Axis Capital has a beta of 0.42, suggesting that its share price is 58% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings for HCI Group and Axis Capital, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
HCI Group 0 1 1 0 2.50
Axis Capital 0 5 1 0 2.17

HCI Group currently has a consensus target price of $46.00, indicating a potential upside of 9.16%. Axis Capital has a consensus target price of $61.50, indicating a potential upside of 7.91%. Given HCI Group’s stronger consensus rating and higher probable upside, analysts plainly believe HCI Group is more favorable than Axis Capital.

Institutional and Insider Ownership

64.4% of HCI Group shares are held by institutional investors. Comparatively, 90.3% of Axis Capital shares are held by institutional investors. 22.3% of HCI Group shares are held by insiders. Comparatively, 2.0% of Axis Capital shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

HCI Group pays an annual dividend of $1.60 per share and has a dividend yield of 3.8%. Axis Capital pays an annual dividend of $1.60 per share and has a dividend yield of 2.8%. HCI Group pays out 49.5% of its earnings in the form of a dividend. Axis Capital pays out 83.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. HCI Group has increased its dividend for 5 consecutive years and Axis Capital has increased its dividend for 12 consecutive years. HCI Group is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares HCI Group and Axis Capital’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
HCI Group $231.29 million 1.57 $17.73 million $3.23 13.05
Axis Capital $5.09 billion 0.94 $43.02 million $1.92 29.68

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

Summary

HCI Group beats Axis Capital on 11 of the 16 factors compared between the two stocks.

About HCI Group

HCI Group, Inc. primarily engages in the property and casualty insurance business in Florida. It provides property and casualty insurance to homeowners, condominium owners, and tenants; and reinsurance. The company also owns and operates one full-service restaurant, two marinas, two retail shopping centers, and one office building. In addition, it offers designs and develops Web-based applications and products for mobile devices. The company was formerly known as Homeowners Choice, Inc. and changed its name to HCI Group, Inc. in May 2013. HCI Group, Inc. was incorporated in 2006 and is headquartered in Tampa, Florida.

About Axis Capital

AXIS Capital Holdings Limited, through its subsidiaries, provides various specialty insurance and reinsurance products worldwide. It operates through two segments, Insurance and Reinsurance. The Insurance segment offers property insurance products for commercial buildings, residential premises, construction projects, and onshore energy installations; marine insurance products covering offshore energy, cargo, liability, recreational marine, fine art, specie, hull, and war; and terrorism, aviation, credit and political risk, and liability insurance products. It also provides professional insurance products that cover directors' and officers' liability, errors and omissions liability, employment practices liability, fiduciary liability, crime, professional indemnity, cyber and privacy, medical malpractice, and other financial insurance related coverages for commercial enterprises, financial institutions, not-for-profit organizations, and other professional service providers. In addition, this segment offers accidental death, travel, and specialty health products for employer and affinity groups, as well as accident and health reinsurance products through wholesale and retail brokers, managing general agents, and underwriters. The Reinsurance segment offers reinsurance products to insurance companies, including catastrophe reinsurance products; property reinsurance products covering property damage and related losses resulting from natural and man-made perils; professional lines; and credit and surety products. This segment also provides agriculture reinsurance products; coverages for various types of construction risks and risks related to erection, testing, and commissioning of machinery and plants during the construction stage; and marine, aviation, and personal accident reinsurance products. The company was founded in 2001 and is headquartered in Pembroke, Bermuda.

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