Critical Analysis: Waterdrop (NYSE:WDH) & Unum Group (NYSE:UNM)

Unum Group (NYSE:UNM) and Waterdrop (NYSE:WDH) are both finance companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, analyst recommendations, valuation, profitability, dividends, institutional ownership and earnings.

Analyst Recommendations

This is a breakdown of recent recommendations for Unum Group and Waterdrop, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Unum Group	0	6	8	0	2.57
Waterdrop	0	2	0	0	2.00

Unum Group currently has a consensus price target of $99.42, indicating a potential upside of 3.17%. Waterdrop has a consensus price target of $2.00, indicating a potential upside of 100.16%. Given Waterdrop’s higher probable upside, analysts plainly believe Waterdrop is more favorable than Unum Group.

Profitability

This table compares Unum Group and Waterdrop’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Unum Group	5.26%	12.60%	2.18%
Waterdrop	12.47%	10.87%	7.94%

Dividends

Unum Group pays an annual dividend of $2.02 per share and has a dividend yield of 2.1%. Waterdrop pays an annual dividend of $0.05 per share and has a dividend yield of 5.0%. Unum Group pays out 47.1% of its earnings in the form of a dividend. Waterdrop pays out 23.8% 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. Unum Group has increased its dividend for 16 consecutive years. Waterdrop is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares Unum Group and Waterdrop”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Unum Group	$13.08 billion	1.17	$738.50 million	$4.29	22.46
Waterdrop	$568.81 million	0.63	$81.36 million	$0.21	4.76

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

Volatility and Risk

Unum Group has a beta of 0.27, suggesting that its share price is 73% less volatile than the S&P 500. Comparatively, Waterdrop has a beta of -0.08, suggesting that its share price is 108% less volatile than the S&P 500.

Insider & Institutional Ownership

86.6% of Unum Group shares are owned by institutional investors. Comparatively, 2.0% of Waterdrop shares are owned by institutional investors. 1.0% of Unum Group shares are owned by insiders. Comparatively, 24.6% of Waterdrop shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

Unum Group beats Waterdrop on 11 of the 17 factors compared between the two stocks.

About Unum Group

Unum Group, together with its subsidiaries, provides financial protection benefit solutions primarily in the United States, the United Kingdom, Poland, and internationally. It operates through Unum US, Unum International, Colonial Life, and Closed Block segment. The company offers group long-term and short-term disability, group life, and accidental death and dismemberment products; supplemental and voluntary products, such as individual disability, voluntary benefits, and dental and vision products; and accident, sickness, disability, life, and cancer and critical illness products. It also provides group pension, individual life and corporate-owned life insurance, reinsurance pools and management operations, and other miscellaneous products. The company sells its products primarily to employers for the benefit of employees. It sells its products through field sales personnel, independent brokers, consultants, and independent contractor agent sales force and brokers. Unum Group was founded in 1848 and is based in Chattanooga, Tennessee.

About Waterdrop

Waterdrop Inc., through its subsidiaries, provides online insurance brokerage services to match and connect users with related insurance products underwritten by insurance companies in the People's Republic of China. The company offers short-term health and long-term health and life insurance products and services. It also operates a medical crowdfunding platform. Waterdrop Inc. was founded in 2016 and is headquartered in Beijing, the People's Republic of China.