Validus (VR) vs. The Competition Financial Survey

Validus (NYSE: VR) is one of 73 public companies in the “Fire, marine, & casualty insurance” industry, but how does it contrast to its peers? We will compare Validus to related companies based on the strength of its analyst recommendations, profitability, earnings, dividends, institutional ownership, valuation and risk.

Dividends

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Validus pays an annual dividend of $1.52 per share and has a dividend yield of 2.2%. Validus pays out -142.1% of its earnings in the form of a dividend. As a group, “Fire, marine, & casualty insurance” companies pay a dividend yield of 1.5% and pay out 81.8% of their earnings in the form of a dividend. Validus has increased its dividend for 3 consecutive years. Validus is clearly a better dividend stock than its peers, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares Validus and its peers top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Net Income Price/Earnings Ratio
Validus $2.80 billion -$47.62 million -63.14
Validus Competitors $12.77 billion $1.43 billion 21.34

Validus’ peers have higher revenue and earnings than Validus. Validus is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Analyst Recommendations

This is a summary of current ratings and target prices for Validus and its peers, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Validus 0 6 1 0 2.14
Validus Competitors 474 1890 1832 83 2.36

Validus currently has a consensus price target of $52.80, suggesting a potential downside of 21.85%. As a group, “Fire, marine, & casualty insurance” companies have a potential upside of 5.92%. Given Validus’ peers stronger consensus rating and higher probable upside, analysts clearly believe Validus has less favorable growth aspects than its peers.

Insider and Institutional Ownership

98.9% of Validus shares are held by institutional investors. Comparatively, 60.9% of shares of all “Fire, marine, & casualty insurance” companies are held by institutional investors. 2.3% of Validus shares are held by insiders. Comparatively, 13.5% of shares of all “Fire, marine, & casualty insurance” companies are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Volatility and Risk

Validus has a beta of 0.99, indicating that its stock price is 1% less volatile than the S&P 500. Comparatively, Validus’ peers have a beta of 0.78, indicating that their average stock price is 22% less volatile than the S&P 500.

Profitability

This table compares Validus and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Validus -1.70% -1.85% -0.52%
Validus Competitors 2.83% 0.53% -0.17%

Summary

Validus peers beat Validus on 10 of the 14 factors compared.

Validus Company Profile

Validus Holdings, Ltd. provides reinsurance coverage, insurance coverage, and insurance linked securities management services worldwide. It operates through three segments: Reinsurance, Insurance, and Asset Management. The Reinsurance segment underwrites property reinsurance products on a catastrophe excess of loss, per risk excess of loss and proportional basis; and aerospace and aviation, agriculture, composite, marine, technical lines, terrorism, trade credit, workers' compensation, and other specialty lines, as well as casualty and financial lines. The Insurance segment underwrites property, accident and health, agriculture, aviation, contingency, marine, and political lines insurance products; bankers blanket bond, commercial crime, computer crime, cyber- crime, professional indemnity, and directors' and officers' insurance products for various financial institutions and other companies; and commercial and institutional risks comprising general, professional, and product liability, as well as miscellaneous malpractice insurance products. This segment also underwrites marine and energy liability, and political risk insurance products, as well as insurance products for repair, maintenance, and upkeep of aircrafts and premises for small companies. The Asset Management segment manages capital for third parties through insurance-linked securities, and other property catastrophe and specialty reinsurance investments. Validus Holdings, Ltd. was founded in 2005 and is based in Pembroke, Bermuda.

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