Critical Contrast: Kemper (NYSE:KMPR) & Stewart Information Services (NYSE:STC)

Stewart Information Services (NYSE:STC) and Kemper (NYSE:KMPR) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, valuation, earnings, profitability and risk.

Volatility & Risk

Stewart Information Services has a beta of 1.04, suggesting that its stock price is 4% more volatile than the S&P 500. Comparatively, Kemper has a beta of 1.07, suggesting that its stock price is 7% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Stewart Information Services and Kemper, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Stewart Information Services	0	3	4	0	2.57
Kemper	3	3	2	0	1.88

Stewart Information Services currently has a consensus price target of $80.25, indicating a potential upside of 52.22%. Kemper has a consensus price target of $37.67, indicating a potential upside of 28.74%. Given Stewart Information Services’ stronger consensus rating and higher possible upside, analysts plainly believe Stewart Information Services is more favorable than Kemper.

Dividends

Stewart Information Services pays an annual dividend of $2.20 per share and has a dividend yield of 4.2%. Kemper pays an annual dividend of $1.28 per share and has a dividend yield of 4.4%. Stewart Information Services pays out 48.2% of its earnings in the form of a dividend. Kemper pays out -15.2% 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. Stewart Information Services has raised its dividend for 4 consecutive years and Kemper has raised its dividend for 1 consecutive years. Kemper is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation and Earnings

This table compares Stewart Information Services and Kemper”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Stewart Information Services	$2.92 billion	0.55	$115.54 million	$4.56	11.56
Kemper	$4.79 billion	0.36	$143.30 million	($8.40)	-3.48

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

Profitability

This table compares Stewart Information Services and Kemper’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Stewart Information Services	4.12%	10.02%	5.12%
Kemper	-10.84%	2.89%	0.60%

Institutional & Insider Ownership

96.9% of Stewart Information Services shares are held by institutional investors. Comparatively, 86.2% of Kemper shares are held by institutional investors. 2.9% of Stewart Information Services shares are held by insiders. Comparatively, 0.6% of Kemper shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

Stewart Information Services beats Kemper on 12 of the 17 factors compared between the two stocks.

About Stewart Information Services

Stewart Information Services Corporation, through its subsidiaries, provides title insurance and real estate transaction related services in the United States and internationally. The company involves in searching, examining, closing, and insuring the condition of the title to real property. It also offers home and personal insurance services; services for tax-deferred exchanges; and digital customer engagement platform services. It also provides appraisal management, online notarization and closing, credit and real estate information, and search and valuation services. The company serves homebuyers and sellers, residential and commercial real estate professionals, mortgage lenders and servicers, title agencies and real estate attorneys, and home builders through direct operations, network of independent agencies, and other businesses. The company was founded in 1893 and is headquartered in Houston, Texas.

About Kemper

Kemper Corporation, a diversified insurance holding company, engages in the provision of insurance products to individuals and businesses in the United States. The company operates through three segments: Specialty Property & Casualty Insurance, Preferred Property & Casualty Insurance, and Life & Health Insurance. It provides preferred and specialty automobile, homeowners, renters, fire, umbrella, general liability, and various other property and casualty insurance to individuals, as well as commercial automobile insurance to businesses. The company also offers life insurance, including permanent and term insurance; and supplemental accident and health insurance products, such as Medicare supplement insurance, fixed hospital indemnity, home health care, specified disease, and accident-only plans to individuals in rural, suburban, and urban areas. It distributes its products through independent agents and brokers. The company was formerly known as Unitrin, Inc. and changed its name to Kemper Corporation in August 2011. Kemper Corporation was incorporated in 1990 and is headquartered in Chicago, Illinois.