Financial Analysis: Global Indemnity (GBLI) versus Leucadia National (LUK)

Global Indemnity (NASDAQ: GBLI) and Leucadia National (NYSE:LUK) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their valuation, profitability, dividends, analyst recommendations, institutional ownership, earnings and risk.

Insider & Institutional Ownership

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56.4% of Global Indemnity shares are owned by institutional investors. Comparatively, 75.4% of Leucadia National shares are owned by institutional investors. 53.3% of Global Indemnity shares are owned by company insiders. Comparatively, 10.2% of Leucadia National shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

Global Indemnity pays an annual dividend of $1.00 per share and has a dividend yield of 2.9%. Leucadia National pays an annual dividend of $0.40 per share and has a dividend yield of 1.8%. Global Indemnity pays out -175.4% of its earnings in the form of a dividend. Leucadia National pays out 90.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Global Indemnity is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Global Indemnity and Leucadia National, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Global Indemnity 0 0 0 0 N/A
Leucadia National 0 0 0 0 N/A

Profitability

This table compares Global Indemnity and Leucadia National’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Global Indemnity -1.97% 0.90% 0.35%
Leucadia National 1.81% 6.25% 1.39%

Valuation and Earnings

This table compares Global Indemnity and Leucadia National’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Global Indemnity $485.52 million 1.00 -$9.55 million ($0.57) -60.00
Leucadia National $11.44 billion 0.68 $171.72 million $0.44 49.82

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

Volatility & Risk

Global Indemnity has a beta of 1, indicating that its share price has a similar volatility profile to the S&P 500.Comparatively, Leucadia National has a beta of 1.3, indicating that its share price is 30% more volatile than the S&P 500.

Summary

Leucadia National beats Global Indemnity on 8 of the 13 factors compared between the two stocks.

Global Indemnity Company Profile

Global Indemnity Limited is a holding company. The Company, through its subsidiary insurance and reinsurance companies, provides both admitted and non-admitted specialty property and casualty insurance coverages and individual policyholder coverages in the United States, as well as reinsurance across the world. Its segments include United States Based Commercial Lines Operations, United States Based Personal Lines Operations and Bermuda Based Reinsurance Operations. Its United States insurance products are distributed through divisions, including Penn-America Group (Binding Authority), Diamond State Group (Brokerage), United National Group (Programs), American Reliable Insurance Company (Binding Authority), J.H. Ferguson & Associates, LLC, VacantExpress.com (Agency), and Collectibles Insurance Services, LLC (Agency). Its multi-channel distribution network consists of the United States and international operations.

Leucadia National Company Profile

Leucadia National Corporation (Leucadia) is a diversified holding company focused on return on investment and long-term value. The Company’s segments, based on requirements are Jefferies, National Beef, and Corporate and other. Jefferies is a global full-service, integrated securities and investment banking firm. National Beef processes and markets fresh boxed beef, case-ready beef, beef by-products and wet blue leather for domestic and international markets. Its financial services businesses include Jefferies Group LLC, Leucadia Asset Management, Berkadia Commercial Mortgage, LLC (commercial mortgage banking and servicing), FXCM Group, LLC, HomeFed Corporation (HomeFed) and Foursight Capital and Chrome Capital (vehicle finance). It also owns and has investments in an array of businesses, including National Beef, HRG Group, Inc. (HRG), Vitesse Energy, LLC and Juneau Energy, LLC, Conwed Plastics and Idaho Timber and Golden Queen Mining Company, LLC (a gold and silver mining project).

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