Brown & Brown (NYSE:BRO) vs. The Hanover Insurance Group (NYSE:THG) Head to Head Comparison

Brown & Brown (NYSE:BRO) and The Hanover Insurance Group (NYSE:THG) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their profitability, valuation, analyst recommendations, earnings, institutional ownership, risk and dividends.

Dividends

Brown & Brown pays an annual dividend of $0.66 per share and has a dividend yield of 0.9%. The Hanover Insurance Group pays an annual dividend of $3.80 per share and has a dividend yield of 1.7%. Brown & Brown pays out 20.8% of its earnings in the form of a dividend. The Hanover Insurance Group pays out 18.1% 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. The Hanover Insurance Group has increased its dividend for 20 consecutive years. The Hanover Insurance Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Brown & Brown has a beta of 0.58, suggesting that its share price is 42% less volatile than the S&P 500. Comparatively, The Hanover Insurance Group has a beta of 0.26, suggesting that its share price is 74% less volatile than the S&P 500.

Earnings & Valuation

This table compares Brown & Brown and The Hanover Insurance Group”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Brown & Brown	$5.90 billion	4.05	$1.05 billion	$3.17	22.53
The Hanover Insurance Group	$6.59 billion	1.21	$662.50 million	$20.95	10.91

Brown & Brown has higher earnings, but lower revenue than The Hanover Insurance Group. The Hanover Insurance Group is trading at a lower price-to-earnings ratio than Brown & Brown, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

71.0% of Brown & Brown shares are held by institutional investors. Comparatively, 86.6% of The Hanover Insurance Group shares are held by institutional investors. 13.1% of Brown & Brown shares are held by insiders. Comparatively, 2.8% of The Hanover Insurance Group shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Brown & Brown and The Hanover Insurance Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Brown & Brown	17.75%	13.17%	5.56%
The Hanover Insurance Group	11.17%	21.72%	4.61%

Analyst Ratings

This is a summary of current ratings and target prices for Brown & Brown and The Hanover Insurance Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Brown & Brown	1	14	4	0	2.16
The Hanover Insurance Group	0	5	3	2	2.70

Brown & Brown currently has a consensus price target of $76.80, indicating a potential upside of 7.53%. The Hanover Insurance Group has a consensus price target of $225.71, indicating a potential downside of 1.23%. Given Brown & Brown’s higher probable upside, research analysts plainly believe Brown & Brown is more favorable than The Hanover Insurance Group.

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.

About The Hanover Insurance Group

The Hanover Insurance Group, Inc., through its subsidiaries, provides various property and casualty insurance products and services in the United States. The company operates through four segments: Core Commercial, Specialty, Personal Lines, and Other. The Commercial Lines segment offers commercial multiple peril, commercial automobile, workers' compensation, and other commercial lines coverage. The Specialty segment provides professional and executive Lines, marine, and surety and other, as well as specialty property and casualty, such as program business, specialty industrial business, excess and surplus business, and specialty general liability coverage. The Personal Lines segment offers personal automobile and homeowner's coverages, as well as other personal coverages, such as personal umbrella, inland marine, fire, personal watercraft, personal cyber, and other miscellaneous coverages. The Other segment markets investment advisory services to institutions, insurance companies, pension funds, and other organizations. The Hanover Insurance Group, Inc. markets its products and services through independent agents and brokers. The company was formerly known as Allmerica Financial Corp. and changed its name to The Hanover Insurance Group, Inc. in December 2005. The Hanover Insurance Group, Inc. was founded in 1852 and is headquartered in Worcester, Massachusetts.