Argo Group (NASDAQ: AGII) and Stewart Information Services (NYSE:STC) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their valuation, risk, earnings, dividends, institutional ownership, profitability and analyst recommendations.
Volatility and Risk
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Argo Group has a beta of 0.62, meaning that its share price is 38% less volatile than the S&P 500. Comparatively, Stewart Information Services has a beta of 0.88, meaning that its share price is 12% less volatile than the S&P 500.
Institutional & Insider Ownership
80.7% of Argo Group shares are owned by institutional investors. Comparatively, 86.4% of Stewart Information Services shares are owned by institutional investors. 5.2% of Argo Group shares are owned by company insiders. Comparatively, 2.3% of Stewart Information Services shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
Earnings and Valuation
This table compares Argo Group and Stewart Information Services’ revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Argo Group||$1.77 billion||1.12||$50.30 million||($0.42)||-140.12|
|Stewart Information Services||$1.96 billion||0.52||$48.65 million||$2.17||19.91|
Argo Group has higher earnings, but lower revenue than Stewart Information Services. Argo Group is trading at a lower price-to-earnings ratio than Stewart Information Services, indicating that it is currently the more affordable of the two stocks.
Argo Group pays an annual dividend of $1.08 per share and has a dividend yield of 1.8%. Stewart Information Services pays an annual dividend of $1.20 per share and has a dividend yield of 2.8%. Argo Group pays out -257.1% of its earnings in the form of a dividend. Stewart Information Services pays out 55.3% 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.
This table compares Argo Group and Stewart Information Services’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Stewart Information Services||2.09%||7.01%||3.40%|
This is a summary of current ratings and price targets for Argo Group and Stewart Information Services, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Stewart Information Services||0||1||0||0||2.00|
Argo Group presently has a consensus price target of $62.00, indicating a potential upside of 5.35%. Stewart Information Services has a consensus price target of $46.00, indicating a potential upside of 6.46%. Given Stewart Information Services’ higher probable upside, analysts clearly believe Stewart Information Services is more favorable than Argo Group.
Stewart Information Services beats Argo Group on 9 of the 16 factors compared between the two stocks.
About Argo Group
Argo Group International Holdings, Ltd. underwrites specialty insurance and reinsurance products in the property and casualty markets. The company operates in two segments, U.S. Operations and International Operations. The U.S. Operations segment underwrites primary and excess specialty casualty, and commercial multi-peril, as well as contract, product, environmental, and auto liability products; and workers compensation, general, management, errors and omissions, and public entity liability risks. This segment distributes its products through a network of wholesale agents and brokers. Its International Operations segment offers coverage for long-tail casualty and general liability; catastrophe reinsurance, and direct and facultative excess reinsurance; professional indemnity, directors and officer's liability, and medical malpractice; and direct and facultative excess reinsurance, North American and international binders, and residential collateral protection for lending institutions. This segment also underwrites risks of general liability, international casualty, and motor treaties; and personal accident, aviation, cargo, yachts, and onshore and offshore marine insurance. It sells its reinsurance products through brokers and third-party intermediaries. Argo Group International Holdings, Ltd. was founded in 1986 and is headquartered in Pembroke, Bermuda.
About Stewart Information Services
Stewart Information Services Corporation, through its subsidiaries, provides title insurance and real estate transaction services. The company operates in two segments, Title Insurance and Related Services, and Ancillary Services and Corporate. The Title Insurance and Related Services segment is involved in searching, examining, closing, and insuring the condition of the title to real property. This segment also offers centralized title services, including title and closing, post-closing, default, and REO-related title services; home and personal insurance services; and services for tax-deferred exchanges. The Ancillary Services and Corporate segment primarily provides search, appraisal, and valuation services to the mortgage industry. The company serves homebuyers and sellers, residential and commercial real estate professionals, mortgage lenders and servicers, title agencies and real estate attorneys, home builders, and mortgage brokers and investors. It operates in the United States, Canada, the United Kingdom, Australia, Central Europe, and internationally. Stewart Information Services Corporation was founded in 1893 and is headquartered in Houston, Texas.