Analyzing Palomar (NASDAQ:PLMR) & MetLife (NYSE:MET)

MetLife (NYSE:MET) and Palomar (NASDAQ:PLMR) are both finance companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, earnings, risk, institutional ownership, valuation, analyst recommendations and dividends.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for MetLife and Palomar, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MetLife	0	2	13	0	2.87
Palomar	0	0	5	1	3.17

MetLife presently has a consensus target price of $105.06, suggesting a potential upside of 5.31%. Palomar has a consensus target price of $160.00, suggesting a potential upside of 17.00%. Given Palomar’s stronger consensus rating and higher probable upside, analysts plainly believe Palomar is more favorable than MetLife.

Insider & Institutional Ownership

95.0% of MetLife shares are owned by institutional investors. Comparatively, 90.2% of Palomar shares are owned by institutional investors. 0.4% of MetLife shares are owned by company insiders. Comparatively, 3.7% of Palomar shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Volatility and Risk

MetLife has a beta of 0.78, indicating that its share price is 22% less volatile than the S&P 500. Comparatively, Palomar has a beta of 0.35, indicating that its share price is 65% less volatile than the S&P 500.

Profitability

This table compares MetLife and Palomar’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MetLife	4.57%	23.39%	0.89%
Palomar	18.61%	23.28%	6.45%

Dividends

MetLife pays an annual dividend of $2.37 per share and has a dividend yield of 2.4%. Palomar pays an annual dividend of $1.80 per share and has a dividend yield of 1.3%. MetLife pays out 45.4% of its earnings in the form of a dividend. Palomar pays out 24.2% 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. MetLife has increased its dividend for 12 consecutive years. MetLife is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares MetLife and Palomar”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MetLife	$77.08 billion	0.83	$3.38 billion	$5.22	19.11
Palomar	$1.09 billion	3.29	$197.07 million	$7.44	18.38

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

About MetLife

MetLife, Inc., a financial services company, provides insurance, annuities, employee benefits, and asset management services worldwide. It operates through six segments: Retirement and Income Solutions; Group Benefits; Asia; Latin America; Europe, the Middle East and Africa; and MetLife Holdings. The company offers life, dental, group short-and long-term disability, individual disability, pet insurance, accidental death and dismemberment, vision, and accident and health coverages, as well as prepaid legal plans; administrative services-only arrangements to employers; and general and separate account, and synthetic guaranteed interest contracts, as well as private floating rate funding agreements. It also provides pension risk transfers, institutional income annuities, structured settlements, and capital markets investment products; and other products and services, such as life insurance products and funding agreements for funding postretirement benefits, as well as company, bank, or trust-owned life insurance used to finance nonqualified benefit programs for executives. In addition, it provides fixed, indexed-linked, and variable annuities; pension products; regular savings products; whole and term life, endowments, universal and variable life, and group life products; longevity reinsurance solutions; credit insurance products; and protection against long-term health care services. MetLife, Inc. was incorporated in 1999 and is based in New York, New York.

About Palomar

Palomar Holdings, Inc., a specialty insurance company, provides property and casualty insurance to residential and businesses in the United States. The company offers personal and commercial specialty property insurance products, including residential and commercial earthquake, fronting, commercial all risk, specialty homeowners, inland marine, Hawaii hurricane, and residential flood, as well as other products, such as assumed reinsurance. It markets and distributes its products through retail agents, wholesale brokers, program administrators, and carrier partnerships. The company was formerly known as GC Palomar Holdings and changed its name to Palomar Holdings, Inc. The company was incorporated in 2013 and is headquartered in La Jolla, California.