Financial Analysis: HRG Group (HRG) versus Hillenbrand (HI)

HRG Group (NYSE: HRG) and Hillenbrand (NYSE:HI) are both mid-cap consumer staples companies, but which is the superior business? We will contrast the two businesses based on the strength of their profitability, risk, earnings, dividends, valuation, analyst recommendations and institutional ownership.

Institutional and Insider Ownership

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95.5% of HRG Group shares are held by institutional investors. Comparatively, 78.1% of Hillenbrand shares are held by institutional investors. 1.2% of HRG Group shares are held by insiders. Comparatively, 1.8% of Hillenbrand shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of recent recommendations and price targets for HRG Group and Hillenbrand, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
HRG Group 0 0 0 0 N/A
Hillenbrand 0 1 2 0 2.67

Hillenbrand has a consensus target price of $53.00, suggesting a potential upside of 17.39%. Given Hillenbrand’s higher possible upside, analysts clearly believe Hillenbrand is more favorable than HRG Group.

Dividends

Hillenbrand pays an annual dividend of $0.83 per share and has a dividend yield of 1.8%. HRG Group does not pay a dividend. Hillenbrand pays out 43.2% of its earnings in the form of a dividend. HRG Group has raised its dividend for 10 consecutive years.

Valuation and Earnings

This table compares HRG Group and Hillenbrand’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
HRG Group $5.01 billion 0.59 $106.00 million $1.98 7.39
Hillenbrand $1.59 billion 1.79 $126.20 million $1.92 23.52

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

Risk & Volatility

HRG Group has a beta of 1.46, meaning that its share price is 46% more volatile than the S&P 500. Comparatively, Hillenbrand has a beta of 1.26, meaning that its share price is 26% more volatile than the S&P 500.

Profitability

This table compares HRG Group and Hillenbrand’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
HRG Group 8.94% -6.02% -0.37%
Hillenbrand 7.52% 19.51% 7.29%

Summary

Hillenbrand beats HRG Group on 8 of the 15 factors compared between the two stocks.

HRG Group Company Profile

HRG Group, Inc. is a holding company. The Company operates through two segments: Consumer Products and Insurance. The Consumer Products segment consists of the Company’s subsidiary, Spectrum Brands Holdings, Inc. (Spectrum Brands). The Insurance segment includes its subsidiary, Front Street Re (Delaware) Ltd. (Front Street). Through Spectrum Brands, the Company is a diversified global branded consumer products company. The Company offers seven product categories: consumer batteries, small appliances, global pet supplies, home and garden control products, personal care products, hardware and home improvement products and global auto care. Through Front Street, the Company is engaged in the business of providing long-term reinsurance, including reinsurance to the specialty insurance sector of fixed, deferred and payout annuities.

Hillenbrand Company Profile

Hillenbrand, Inc. is a diversified industrial company with multiple brands that serve a range of industries across the globe. The Company operates in two segments: the Process Equipment Group and Batesville. The Process Equipment Group businesses design, develop, manufacture and service engineered industrial equipment throughout the world. The Process Equipment Group segment is a provider of compounding, extrusion and material handling; size reduction; screening and separating, and flow control products and services for a range of manufacturing and other industrial processes. It offers equipment for industries, including plastics, chemicals, fertilizers and mining. Its Batesville segment operates in the North American death care industry, and manufactures and sells funeral service products, including burial caskets, cremation caskets, containers and urns, selection room display fixtures, other personalization and memorialization products, and Web-based technology applications.

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