Stewart Information Services (NYSE:STC) and Primerica (NYSE:PRI) Critical Survey

Primerica (NYSE:PRI) and Stewart Information Services (NYSE:STC) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, valuation, profitability, risk, earnings and dividends.

Insider & Institutional Ownership

90.9% of Primerica shares are held by institutional investors. Comparatively, 96.9% of Stewart Information Services shares are held by institutional investors. 0.6% of Primerica shares are held by company insiders. Comparatively, 2.9% of Stewart Information Services shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Primerica and Stewart Information Services, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Primerica	0	5	2	0	2.29
Stewart Information Services	1	2	4	0	2.43

Primerica currently has a consensus price target of $318.80, suggesting a potential upside of 8.85%. Stewart Information Services has a consensus price target of $75.75, suggesting a potential upside of 81.70%. Given Stewart Information Services’ stronger consensus rating and higher possible upside, analysts clearly believe Stewart Information Services is more favorable than Primerica.

Profitability

This table compares Primerica and Stewart Information Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Primerica	22.86%	30.90%	5.41%
Stewart Information Services	3.58%	9.39%	4.77%

Valuation & Earnings

This table compares Primerica and Stewart Information Services”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Primerica	$3.29 billion	2.70	$751.23 million	$25.31	11.57
Stewart Information Services	$3.37 billion	0.38	$115.54 million	$3.99	10.45

Primerica has higher earnings, but lower revenue than Stewart Information Services. Stewart Information Services is trading at a lower price-to-earnings ratio than Primerica, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Primerica has a beta of 0.86, indicating that its stock price is 14% less volatile than the S&P 500. Comparatively, Stewart Information Services has a beta of 1.02, indicating that its stock price is 2% more volatile than the S&P 500.

Dividends

Primerica pays an annual dividend of $4.80 per share and has a dividend yield of 1.6%. Stewart Information Services pays an annual dividend of $2.20 per share and has a dividend yield of 5.3%. Primerica pays out 19.0% of its earnings in the form of a dividend. Stewart Information Services pays out 55.1% 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. Primerica has increased its dividend for 2 consecutive years and Stewart Information Services has increased its dividend for 4 consecutive years. Stewart Information Services is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Stewart Information Services beats Primerica on 9 of the 17 factors compared between the two stocks.

About Primerica

Primerica, Inc. provides financial products and services to middle-income households in the United States and Canada. Its core business is term life insurance, which it distributes through a network of representatives who work directly with clients. Through its investment and savings businesses, Primerica offers products and services including mutual funds, annuities, managed investment accounts, and retirement planning solutions. It also connects clients with certain third-party providers of products such as auto and homeowners insurance.

About Stewart Information Services

Stewart Information Services Corporation is a Houston-based provider of title insurance and real estate transaction services. Its business includes issuing title insurance policies and supporting property transfers through services such as title searches, escrow, closing and settlement. The company serves homebuyers, sellers, real estate professionals, mortgage lenders and other participants in property transactions. It also provides related services, including property information and services supporting mortgage lending and real estate operations.