Critical Analysis: Waterdrop (NYSE:WDH) and Old Republic International (NYSE:ORI)

Waterdrop (NYSE:WDH) and Old Republic International (NYSE:ORI) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, dividends, profitability, valuation, earnings, risk and institutional ownership.

Risk & Volatility

Waterdrop has a beta of -0.22, suggesting that its share price is 122% less volatile than the S&P 500. Comparatively, Old Republic International has a beta of 0.72, suggesting that its share price is 28% less volatile than the S&P 500.

Dividends

Waterdrop pays an annual dividend of $0.05 per share and has a dividend yield of 3.0%. Old Republic International pays an annual dividend of $1.26 per share and has a dividend yield of 3.1%. Waterdrop pays out 23.8% of its earnings in the form of a dividend. Old Republic International pays out 33.8% 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. Old Republic International has raised its dividend for 45 consecutive years. Old Republic International is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

2.0% of Waterdrop shares are held by institutional investors. Comparatively, 70.9% of Old Republic International shares are held by institutional investors. 24.6% of Waterdrop shares are held by insiders. Comparatively, 1.3% of Old Republic International shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Waterdrop and Old Republic International’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Waterdrop	14.28%	11.34%	8.53%
Old Republic International	10.83%	15.71%	3.23%

Analyst Recommendations

This is a breakdown of current ratings and target prices for Waterdrop and Old Republic International, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Waterdrop	0	2	0	0	2.00
Old Republic International	0	2	1	1	2.75

Waterdrop currently has a consensus target price of $2.00, indicating a potential upside of 18.69%. Old Republic International has a consensus target price of $42.00, indicating a potential upside of 4.99%. Given Waterdrop’s higher possible upside, research analysts clearly believe Waterdrop is more favorable than Old Republic International.

Valuation and Earnings

This table compares Waterdrop and Old Republic International”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Waterdrop	$568.81 million	1.07	$81.36 million	$0.21	8.02
Old Republic International	$9.42 billion	1.03	$935.40 million	$3.73	10.73

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

Summary

Old Republic International beats Waterdrop on 12 of the 18 factors compared between the two stocks.

About Waterdrop

Waterdrop Inc., through its subsidiaries, provides online insurance brokerage services to match and connect users with related insurance products underwritten by insurance companies in the People's Republic of China. The company offers short-term health and long-term health and life insurance products and services. It also operates a medical crowdfunding platform. Waterdrop Inc. was founded in 2016 and is headquartered in Beijing, the People's Republic of China.

About Old Republic International

Old Republic International Corporation, through its subsidiaries, engages in the insurance underwriting and related services business primarily in the United States and Canada. It operates through three segments: General Insurance, Title Insurance, and Republic Financial Indemnity Group Run-off Business. The General Insurance segment offers aviation, commercial auto, commercial multi-peril, commercial property, general liability, home and auto warranty, inland marine, travel accident, and workers' compensation insurance products; and financial indemnity products for specialty coverages, including errors and omissions, fidelity, directors and officers, and surety. This segment provides its insurance products to businesses, state and local government, and other institutions in transportation, commercial construction, healthcare, education, retail and wholesale trade, forest products, energy, general manufacturing, and financial services industries. The Title Insurance segment offers lenders' and owners' policies to real estate purchasers and investors based upon searches of the public records. This segment also provides escrow closing and construction disbursement services; and real estate information products, national default management services, and various other services pertaining to real estate transfers and loan transactions. The Republic Financial Indemnity Group Run-off Business segment offers private mortgage insurance coverage that protects mortgage lenders and investors from default related losses on residential mortgage loans made primarily to homebuyers. Old Republic International Corporation was founded in 1923 and is based in Chicago, Illinois.