Home Medical Malpractice Head-To-Head Comparison: Fairfax Financial (OTCMKTS:FRFHF) & W. R. Berkley (NYSE:WRB)

Head-To-Head Comparison: Fairfax Financial (OTCMKTS:FRFHF) & W. R. Berkley (NYSE:WRB)

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W. R. Berkley (NYSE:WRB – Get Rating) and Fairfax Financial (OTCMKTS:FRFHF – Get Rating) are both large-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, dividends, profitability, valuation, risk and earnings.

Volatility and Risk

W. R. Berkley has a beta of 0.65, suggesting that its share price is 35% less volatile than the S&P 500. Comparatively, Fairfax Financial has a beta of 0.82, suggesting that its share price is 18% less volatile than the S&P 500.

Profitability

This table compares W. R. Berkley and Fairfax Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
W. R. Berkley 12.71% 17.26% 3.59%
Fairfax Financial 2.54% 3.32% 0.73%

Dividends

W. R. Berkley pays an annual dividend of $0.40 per share and has a dividend yield of 0.6%. Fairfax Financial pays an annual dividend of $10.00 per share and has a dividend yield of 1.9%. W. R. Berkley pays out 8.4% of its earnings in the form of a dividend. Fairfax Financial pays out 58.9% 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. W. R. Berkley has raised its dividend for 22 consecutive years.

Valuation and Earnings

This table compares W. R. Berkley and Fairfax Financial’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
W. R. Berkley $9.46 billion 1.73 $1.02 billion $4.75 13.01
Fairfax Financial $26.47 billion 0.49 $3.40 billion $16.98 30.48

Fairfax Financial has higher revenue and earnings than W. R. Berkley. W. R. Berkley is trading at a lower price-to-earnings ratio than Fairfax Financial, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current recommendations and price targets for W. R. Berkley and Fairfax Financial, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
W. R. Berkley 0 3 8 0 2.73
Fairfax Financial 0 1 3 0 2.75

W. R. Berkley currently has a consensus price target of $70.03, suggesting a potential upside of 13.26%. Fairfax Financial has a consensus price target of $913.33, suggesting a potential upside of 76.45%. Given Fairfax Financial’s stronger consensus rating and higher probable upside, analysts clearly believe Fairfax Financial is more favorable than W. R. Berkley.

Insider and Institutional Ownership

49.9% of W. R. Berkley shares are held by institutional investors. Comparatively, 0.6% of Fairfax Financial shares are held by institutional investors. 22.3% of W. R. Berkley shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Summary

W. R. Berkley beats Fairfax Financial on 9 of the 17 factors compared between the two stocks.

About W. R. Berkley

(Get Rating)

W. R. Berkley Corporation, an insurance holding company, operates as a commercial lines writer in the United States and internationally. It operates in two segments, Insurance and Reinsurance & Monoline Excess. The Insurance segment underwrites commercial insurance business, including premises operations, commercial automobile, property, products liability, and general and professional liability lines. It also provides workers’ compensation insurance products; accident and health insurance and reinsurance products; insurance for commercial risks; specialty environmental products for contractors, consultants, and property owners and facilities operators; specialized insurance coverages for fine arts and jewelry exposures; umbrella and excess liability coverage products; and liquor liability and inland marine coverage for small to medium-sized insureds. In addition, this segment offers directors and officers, and surety risk products, as well as products for technology, and life sciences and travel industries; cyber risk solutions; casualty, group life, and crime and fidelity related insurance products; personal lines insurance solutions, including home, condo/co-op, auto, and collectibles; automobile, law enforcement, public officials and educator’s legal, and employment practices liability, as well as incidental medical insurance products; and at-risk and alternative risk insurance program management services. The Reinsurance & Monoline Excess segment provides other insurance companies and self-insureds with assistance in managing their net risk through reinsurance on a portfolio basis through treaty reinsurance or on an individual basis through facultative reinsurance. W. R. Berkley Corporation was founded in 1967 and is based in Greenwich, Connecticut.

About Fairfax Financial

(Get Rating)

Fairfax Financial Holdings Limited, through its subsidiaries, provides property and casualty insurance and reinsurance, and investment management services in the United States, Canada, Asia, and internationally. The company operates through Insurance and Reinsurance, Run-off, and Non-Insurance Companies segments. It insures against losses to property from fire, explosion, earthquake, windstorm, flood, boiler explosion, machinery breakdown, and construction defects, as well as underwrites automobile, commercial and personal property, and crop insurance. The company also offers workers’ compensation, employer’s liability, accident and health, medical malpractice, professional liability, and umbrella coverage insurance products; marine, aerospace, surety risk, and other risks and liabilities insurance products; and reinsurance products. In addition, it retails home improvement goods, toys and baby products, golf equipment, sports apparel and accessories, housewares and home décors, and tableware and gifts; invests in retail business; and owns and operates holiday resorts. Further, the company provides integrated travel and travel-related financial services; originates, processes, and distributes pulses and staple foods; creates, produces, and distributes entertainment content; and provision of pet medical insurance and database services, as well as media and marketing solutions. The company was formerly known as Markel Financial Holdings Limited and changed its name to Fairfax Financial Holdings Limited in 1987. Fairfax Financial Holdings Limited was incorporated in 1951 and is headquartered in Toronto, Canada.



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