In a competitive landscape of financial services, two companies are vying for attention: Hagerty (NYSE:HGTY) and American Coastal Insurance (NASDAQ:ACIC). Both firms operate within the insurance sector, yet they exhibit distinct differences in profitability, risk, dividends, and overall performance. A thorough analysis reveals which company may hold an advantage in the current market.
Profitability and Financial Metrics
When examining profitability, American Coastal Insurance showcases higher net margins and returns compared to Hagerty. As of the latest reports, American Coastal Insurance boasts a net margin of 25.95%, a return on equity of 30.06%, and a return on assets of 6.84%. In contrast, Hagerty reports a net margin of 5.85%, a return on equity of 16.85%, and a return on assets of 4.94%.
Earnings and valuation metrics further highlight the disparities. While Hagerty generates a gross revenue of $1.20 billion, its net income stands at $17.02 million, translating to earnings per share of $0.28 and a price-to-earnings ratio of 48.91. Conversely, American Coastal Insurance’s revenue is significantly lower at $296.66 million, yet it reports a net income of $75.72 million, with earnings per share of $1.71 and a price-to-earnings ratio of 6.83. This suggests that while Hagerty has stronger revenue figures, American Coastal Insurance achieves greater profitability per share.
Ownership and Market Stability
The ownership structure of both companies also plays a crucial role in their market performance. Institutional investors hold 20.5% of Hagerty’s shares, while 22.1% of American Coastal Insurance shares are owned by institutions. Moreover, insider ownership shows a stark contrast, with 16.7% of Hagerty shares held by insiders compared to 49.9% for American Coastal Insurance. This significant insider ownership at American Coastal may indicate strong confidence in the company’s future performance.
In terms of volatility, Hagerty’s beta is recorded at 0.91, indicating that its share price is 9% less volatile than the S&P 500. American Coastal Insurance, however, has a beta of -0.49, suggesting its share price is 149% less volatile than the index. This lower volatility may appeal to risk-averse investors seeking stability in their portfolios.
Analyst recommendations further illustrate the market’s perception of these companies. Current ratings show that Hagerty has a consensus target price of $14.00, indicating a potential upside of 2.23%. In contrast, American Coastal Insurance received a lower rating score of 2.00, with no strong buy recommendations noted. This suggests that analysts view Hagerty as the more favorable investment option, given its stronger consensus rating and potential for growth.
Hagerty, headquartered in Traverse City, Michigan, provides a range of insurance products for motor vehicles and boats, along with additional services like automotive valuation tools and emergency roadside assistance. The company also engages with customers through Hagerty Media, offering a subscription-based model that includes a magazine and events for automotive enthusiasts.
On the other hand, American Coastal Insurance, based in Saint Petersburg, Florida, specializes in property and casualty insurance. Founded in 1999 and formerly known as United Insurance Holdings Corp., the company rebranded in August 2023. American Coastal offers a variety of insurance products, including homeowner’s coverage, commercial multi-peril insurance, and specialized policies for identity theft and cyber security.
In summary, while both Hagerty and American Coastal Insurance operate within the insurance sector, their financial metrics, ownership structures, and market perceptions present distinct advantages and challenges. Investors may find American Coastal Insurance appealing due to its higher earnings and lower volatility, while those seeking robust revenue generation and potential growth might lean towards Hagerty. Each company’s unique offerings and market positions suggest that the choice between them ultimately depends on individual investment strategies and risk tolerances.
