Financial Survey: Lemonade (NYSE:LMND) versus RLI (NYSE:RLI)

RLI (NYSE:RLI) and Lemonade (NYSE:LMND) are both mid-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, dividends, valuation, earnings and profitability.

Analyst Ratings

This is a summary of current ratings and price targets for RLI and Lemonade, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RLI	1	4	2	0	2.14
Lemonade	4	1	1	0	1.50

RLI presently has a consensus target price of $78.60, suggesting a potential upside of 9.46%. Lemonade has a consensus target price of $28.17, suggesting a potential downside of 26.98%. Given RLI’s stronger consensus rating and higher probable upside, research analysts clearly believe RLI is more favorable than Lemonade.

Risk and Volatility

RLI has a beta of 0.7, suggesting that its share price is 30% less volatile than the S&P 500. Comparatively, Lemonade has a beta of 2.14, suggesting that its share price is 114% more volatile than the S&P 500.

Valuation & Earnings

This table compares RLI and Lemonade”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
RLI	$1.73 billion	3.80	$345.78 million	$3.04	23.62
Lemonade	$558.60 million	5.06	-$236.90 million	($3.04)	-12.69

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

Institutional & Insider Ownership

77.9% of RLI shares are owned by institutional investors. Comparatively, 80.3% of Lemonade shares are owned by institutional investors. 2.2% of RLI shares are owned by company insiders. Comparatively, 14.7% of Lemonade shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares RLI and Lemonade’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
RLI	19.53%	16.63%	4.76%
Lemonade	-43.51%	-32.85%	-12.59%

Summary

RLI beats Lemonade on 10 of the 14 factors compared between the two stocks.

About RLI

RLI Corp., an insurance holding company, underwrites property and casualty insurance. Its Casualty segment provides commercial and personal coverage products; and general liability products, such as coverage for third-party liability of commercial insureds, including manufacturers, contractors, apartments, and mercantile. It also offers coverages for security guards and environmental liability for underground storage tanks, contractors and asbestos, and environmental remediation specialists; and professional liability coverages for errors and omission coverage for small to medium-sized design, technical, computer, and miscellaneous professionals. This segment provides commercial automobile liability and physical damage insurance to local, intermediate and long haul truckers, public transportation entities, and other types of specialty commercial automobile risks; incidental and related insurance coverages; inland marine coverages; management liability coverages, such as directors and officers liability insurance, fiduciary liability and coverages, employment practice liability, and for various classes of risks, including public and private businesses; and home business insurance products. The company's Property segment offers commercial property, cargo, hull, protection and indemnity, marine liability, inland marine, homeowners' and dwelling fire, and other property insurance products. Its Surety segment offers commercial surety bonds for medium to large-sized businesses; small bonds for businesses and individuals; and bonds for small to medium-sized contractors. The company also engages in various reinsurance coverages. It markets its products through branch offices, wholesale and retail brokers, carrier partners, and underwriting and independent agents. RLI Corp. was incorporated in 1965 and is headquartered in Peoria, Illinois.

About Lemonade

Lemonade, Inc. provides various insurance products through various channels in the United States, Europe, and the United Kingdom. Its insurance products include stolen or damaged property, and personal liability that protects its customers if they are responsible for an accident or damage to another person or their property. The company also offers renters, homeowners, car, pet, and life insurance products, as well as landlord insurance policies. In addition, it operates as an agent for other insurance companies. The company was formerly known as Lemonade Group, Inc. and changed its name to Lemonade, Inc. Lemonade, Inc. was incorporated in 2015 and is headquartered in New York, New York.