Critical Contrast: United Fire Group (NASDAQ:UFCS) versus Unum Group (NYSE:UNM)

Unum Group (NYSE:UNM) and United Fire Group (NASDAQ:UFCS) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, risk, profitability, earnings and valuation.

Earnings & Valuation

This table compares Unum Group and United Fire Group”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Unum Group	$13.08 billion	1.16	$738.50 million	$4.29	22.35
United Fire Group	$1.47 billion	0.98	$118.19 million	$5.38	10.41

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

Dividends

Unum Group pays an annual dividend of $2.02 per share and has a dividend yield of 2.1%. United Fire Group pays an annual dividend of $0.80 per share and has a dividend yield of 1.4%. Unum Group pays out 47.1% of its earnings in the form of a dividend. United Fire Group pays out 14.9% 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. Unum Group has raised its dividend for 16 consecutive years. Unum Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

86.6% of Unum Group shares are held by institutional investors. Comparatively, 62.7% of United Fire Group shares are held by institutional investors. 1.0% of Unum Group shares are held by company insiders. Comparatively, 6.1% of United Fire Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Volatility and Risk

Unum Group has a beta of 0.27, suggesting that its share price is 73% less volatile than the S&P 500. Comparatively, United Fire Group has a beta of 0.52, suggesting that its share price is 48% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Unum Group and United Fire Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Unum Group	0	6	8	0	2.57
United Fire Group	0	1	2	1	3.00

Unum Group currently has a consensus price target of $99.42, indicating a potential upside of 3.68%. United Fire Group has a consensus price target of $52.50, indicating a potential downside of 6.22%. Given Unum Group’s higher possible upside, equities analysts clearly believe Unum Group is more favorable than United Fire Group.

Profitability

This table compares Unum Group and United Fire Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Unum Group	5.26%	12.60%	2.18%
United Fire Group	9.57%	15.19%	3.69%

About Unum Group

Unum Group, together with its subsidiaries, provides financial protection benefit solutions primarily in the United States, the United Kingdom, Poland, and internationally. It operates through Unum US, Unum International, Colonial Life, and Closed Block segment. The company offers group long-term and short-term disability, group life, and accidental death and dismemberment products; supplemental and voluntary products, such as individual disability, voluntary benefits, and dental and vision products; and accident, sickness, disability, life, and cancer and critical illness products. It also provides group pension, individual life and corporate-owned life insurance, reinsurance pools and management operations, and other miscellaneous products. The company sells its products primarily to employers for the benefit of employees. It sells its products through field sales personnel, independent brokers, consultants, and independent contractor agent sales force and brokers. Unum Group was founded in 1848 and is based in Chattanooga, Tennessee.

About United Fire Group

United Fire Group, Inc., together with its subsidiaries, provides property and casualty insurance for individuals and businesses in the United States. The company offers commercial and personal lines of property and casualty insurance; and reinsurance coverage for property and casualty insurance. Its commercial lines include fire and allied lines, other liability, automobile, workers’ compensation, fidelity and surety coverage, and other insurance products; and personal lines comprise automobile, and fire and allied lines coverage, including homeowners, as well as provides assumed reinsurance products. The company sells its products through a network of independent agencies. United Fire Group, Inc. was incorporated in 1946 and is headquartered in Cedar Rapids, Iowa.