Palomar (NASDAQ:PLMR – Get Free Report) and Sun Life Financial (NYSE:SLF – Get Free Report) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, risk, dividends, earnings, institutional ownership, analyst recommendations and valuation.
Risk & Volatility
Palomar has a beta of 0.35, suggesting that its stock price is 65% less volatile than the S&P 500. Comparatively, Sun Life Financial has a beta of 0.89, suggesting that its stock price is 11% less volatile than the S&P 500.
Analyst Ratings
This is a summary of current recommendations and price targets for Palomar and Sun Life Financial, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Palomar | 0 | 0 | 5 | 1 | 3.17 |
| Sun Life Financial | 1 | 5 | 5 | 1 | 2.50 |
Dividends
Palomar pays an annual dividend of $1.80 per share and has a dividend yield of 1.4%. Sun Life Financial pays an annual dividend of $2.74 per share and has a dividend yield of 3.6%. Palomar pays out 24.2% of its earnings in the form of a dividend. Sun Life Financial pays out 64.0% 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. Sun Life Financial has raised its dividend for 11 consecutive years. Sun Life Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Insider and Institutional Ownership
90.2% of Palomar shares are owned by institutional investors. Comparatively, 52.3% of Sun Life Financial shares are owned by institutional investors. 3.7% of Palomar shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Valuation and Earnings
This table compares Palomar and Sun Life Financial”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Palomar | $875.97 million | 3.93 | $197.07 million | $7.44 | 17.58 |
| Sun Life Financial | $29.99 billion | 1.43 | $2.68 billion | $4.28 | 17.99 |
Sun Life Financial has higher revenue and earnings than Palomar. Palomar is trading at a lower price-to-earnings ratio than Sun Life Financial, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Palomar and Sun Life Financial’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Palomar | 18.61% | 23.28% | 6.45% |
| Sun Life Financial | 7.66% | 17.96% | 1.08% |
Summary
Palomar beats Sun Life Financial on 9 of the 16 factors compared between the two stocks.
About Palomar
Palomar Holdings, Inc., a specialty insurance company, provides property and casualty insurance to residential and businesses in the United States. The company offers personal and commercial specialty property insurance products, including residential and commercial earthquake, fronting, commercial all risk, specialty homeowners, inland marine, Hawaii hurricane, and residential flood, as well as other products, such as assumed reinsurance. It markets and distributes its products through retail agents, wholesale brokers, program administrators, and carrier partnerships. The company was formerly known as GC Palomar Holdings and changed its name to Palomar Holdings, Inc. The company was incorporated in 2013 and is headquartered in La Jolla, California.
About Sun Life Financial
Sun Life Financial Inc., a financial services company, provides savings, retirement, and pension products worldwide. The company operates in five segments: Asset Management, Canada, U.S., Asia, and Corporate. It offers various insurance products, such as term and permanent life; personal health, which includes prescription drugs, dental, and vision care; critical illness; long-term care; and disability, as well as reinsurance. The company also provides advice for financial planning and retirement planning services; investments products, such as mutual funds, segregated funds, and annuities; and asset and investment management products consisting of pooled funds, institutional portfolios, and pension funds. In addition, it offers real estate services; manages equity capital in various private and listed funds, as well as mezzanine debt, middle market direct lending, high-yield bonds, and syndicated loans; and operates as an investment grade fixed income investor, real estate investment management advisor, infrastructure investment manager, and alternative credit investment manager. The company was formerly known as Sun Life Financial Services of Canada Inc. and changed its name to Sun Life Financial Inc. in July 2003. Sun Life Financial Inc. was founded in 1871 and is headquartered in Toronto, Canada.
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