Head to Head Comparison: Palomar (NASDAQ:PLMR) versus Waterdrop (NYSE:WDH)

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

Profitability

This table compares Palomar and Waterdrop’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Palomar	17.60%	25.42%	6.90%
Waterdrop	10.69%	10.47%	7.40%

Volatility & Risk

Palomar has a beta of 0.28, indicating that its stock price is 72% less volatile than the S&P 500. Comparatively, Waterdrop has a beta of -0.17, indicating that its stock price is 117% less volatile than the S&P 500.

Dividends

Palomar pays an annual dividend of $1.80 per share and has a dividend yield of 1.1%. Waterdrop pays an annual dividend of $0.05 per share and has a dividend yield of 5.0%. Palomar pays out 22.5% of its earnings in the form of a dividend. Waterdrop pays out 23.8% 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.

Institutional & Insider Ownership

90.2% of Palomar shares are held by institutional investors. Comparatively, 2.0% of Waterdrop shares are held by institutional investors. 3.7% of Palomar shares are held by insiders. Comparatively, 24.6% of Waterdrop shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Palomar and Waterdrop”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	4.71	$197.07 million	$7.99	19.62
Waterdrop	$568.81 million	0.64	$81.36 million	$0.21	4.79

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

Analyst Recommendations

This is a summary of recent ratings for Palomar and Waterdrop, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Palomar	0	1	6	0	2.86
Waterdrop	1	0	0	0	1.00

Palomar presently has a consensus target price of $164.80, suggesting a potential upside of 5.12%. Given Palomar’s stronger consensus rating and higher possible upside, analysts clearly believe Palomar is more favorable than Waterdrop.

Summary

Palomar beats Waterdrop on 13 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 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.