In a detailed analysis of two finance companies, Hagerty (NYSE:HGTY) and American Coastal Insurance (NASDAQ:ACIC), a comparison of their financial health reveals significant differences in profitability, risk, and investor sentiment. This examination focuses on critical metrics such as risk assessment, profitability, dividends, institutional ownership, valuation, and analyst recommendations.
Financial Performance and Profitability
Hagerty reported a net margin of 5.85%, with a return on equity of 16.85% and a return on assets of 4.94%. In contrast, American Coastal Insurance showcased a more robust performance with a net margin of 25.95%, a return on equity of 30.06%, and a return on assets of 6.84%. These figures indicate that while Hagerty has a larger revenue stream, American Coastal Insurance is more efficient in converting sales into profit.
The gross revenue for Hagerty stands at $1.20 billion, compared to American Coastal Insurance’s $296.66 million. However, despite the difference in revenue, American Coastal Insurance’s earnings per share (EPS) of $1.71 surpass Hagerty’s EPS of $0.28. This disparity in earnings reflects a lower price-to-earnings ratio for American Coastal Insurance at 6.83, suggesting it may represent a more cost-effective investment opportunity compared to Hagerty’s 48.91 ratio.
Ownership and Market Stability
The ownership structure of these companies also provides insights into their market positions. Institutional investors hold 20.5% of Hagerty’s shares, while American Coastal Insurance benefits from a higher institutional ownership at 22.1%. Furthermore, insider ownership is considerably greater at American Coastal Insurance, with 49.9% of shares held by company insiders, compared to 16.7% for Hagerty. Strong insider ownership typically indicates confidence from those most familiar with the company’s operations and prospects.
In terms of volatility, Hagerty has a beta of 0.91, indicating that its stock is 9% less volatile than the broader S&P 500 index. Conversely, American Coastal Insurance demonstrates an even lower volatility with a beta of -0.49, suggesting it is 149% less volatile than the S&P 500. This could make American Coastal Insurance a more attractive option for risk-averse investors.
Analyst Recommendations and Market Sentiment
Recent analyst ratings illustrate a divergence in market sentiment towards these two companies. Hagerty has received a consensus rating score of 2.40 based on a mix of “buy,” “hold,” and “sell” recommendations. This includes a target price of $14.00, suggesting a potential upside of 2.23%. In contrast, American Coastal Insurance has a lower consensus rating score of 2.00 with no buy ratings reported, indicating that analysts may favor Hagerty over its competitor.
About Hagerty, Inc., the company specializes in offering insurance agency services globally, particularly focusing on motor vehicle and boat insurance products. The company is headquartered in Traverse City, Michigan, and provides a range of services including Hagerty Media and Hagerty Garage + Social, which cater to automotive enthusiasts.
American Coastal Insurance Corporation, based in Saint Petersburg, Florida, operates primarily in the property and casualty insurance sector. The firm provides coverage for residential and commercial property, as well as liability insurance. Notably, it recently rebranded from United Insurance Holdings Corp. in August 2023.
In conclusion, while both Hagerty and American Coastal Insurance operate within the financial sector, their performance metrics and market perceptions suggest differing strengths. Investors may find American Coastal Insurance appealing due to its higher profitability margins and lower valuation metrics, while Hagerty’s broader revenue base and higher analyst ratings may indicate stronger growth prospects in the long term.
