Head-To-Head Survey: Unum Group (NYSE:UNM) versus Mercury General (NYSE:MCY)

Mercury General (NYSE:MCY) and Unum Group (NYSE:UNM) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, risk, profitability, institutional ownership, valuation, earnings and analyst recommendations.

Dividends

Mercury General pays an annual dividend of $1.27 per share and has a dividend yield of 1.2%. Unum Group pays an annual dividend of $2.02 per share and has a dividend yield of 2.2%. Mercury General pays out 7.5% of its earnings in the form of a dividend. Unum Group pays out 47.1% 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 increased 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 & Institutional Ownership

42.4% of Mercury General shares are owned by institutional investors. Comparatively, 86.6% of Unum Group shares are owned by institutional investors. 35.5% of Mercury General shares are owned by insiders. Comparatively, 1.0% of Unum Group shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Mercury General and Unum Group”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mercury General	$5.99 billion	0.96	$541.09 million	$16.92	6.14
Unum Group	$13.08 billion	1.10	$738.50 million	$4.29	21.22

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

Analyst Recommendations

This is a breakdown of recent ratings for Mercury General and Unum Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mercury General	0	0	1	1	3.50
Unum Group	0	6	8	0	2.57

Unum Group has a consensus target price of $99.42, indicating a potential upside of 9.20%. Given Unum Group’s higher possible upside, analysts clearly believe Unum Group is more favorable than Mercury General.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Mercury General	14.77%	31.98%	8.19%
Unum Group	5.26%	12.60%	2.18%

Volatility and Risk

Mercury General has a beta of 0.89, meaning that its share price is 11% less volatile than the S&P 500. Comparatively, Unum Group has a beta of 0.25, meaning that its share price is 75% less volatile than the S&P 500.

About Mercury General

Mercury General Corporation, together with its subsidiaries, engages in writing personal automobile insurance in the United States. The company also writes homeowners, commercial automobile, commercial property, mechanical protection, and umbrella insurance products. Its automobile insurance products include collision, property damage, bodily injury, comprehensive, personal injury protection, underinsured and uninsured motorist, and other hazards; and homeowners insurance products comprise dwelling, liability, personal property, and other coverages. The company sells its policies through a network of independent agents, insurance agencies, as well as directly through internet sales portals in Arizona, California, Florida, Georgia, Illinois, Nevada, New Jersey, New York, Oklahoma, Texas, and Virginia. Mercury General Corporation was founded in 1961 and is headquartered in Los Angeles, California.

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.