Critical Review: Validus Holdings (NYSE:VR) and Maiden Holdings (MHLD)

Maiden Holdings (NASDAQ: MHLD) and Validus Holdings (NYSE:VR) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, risk, dividends and earnings.

Institutional & Insider Ownership

66.5% of Maiden Holdings shares are owned by institutional investors. Comparatively, 97.5% of Validus Holdings shares are owned by institutional investors. 10.0% of Maiden Holdings shares are owned by insiders. Comparatively, 2.3% of Validus Holdings shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Maiden Holdings and Validus Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Maiden Holdings -0.61% -0.55% -0.09%
Validus Holdings 11.81% 7.75% 2.55%

Dividends

Maiden Holdings pays an annual dividend of $0.60 per share and has a dividend yield of 8.6%. Validus Holdings pays an annual dividend of $1.52 per share and has a dividend yield of 2.8%. Maiden Holdings pays out -120.0% of its earnings in the form of a dividend. Validus Holdings pays out 41.9% 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. Maiden Holdings has increased its dividend for 2 consecutive years. Maiden Holdings is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Maiden Holdings and Validus Holdings’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Maiden Holdings $2.91 billion 0.21 $28.76 million ($0.50) -14.00
Validus Holdings $2.48 billion 1.71 $538.06 million $3.63 14.73

Validus Holdings has higher revenue, but lower earnings than Maiden Holdings. Maiden Holdings is trading at a lower price-to-earnings ratio than Validus Holdings, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Maiden Holdings has a beta of 1.18, meaning that its stock price is 18% more volatile than the S&P 500. Comparatively, Validus Holdings has a beta of 0.64, meaning that its stock price is 36% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations for Maiden Holdings and Validus Holdings, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Maiden Holdings 0 1 1 0 2.50
Validus Holdings 0 3 1 0 2.25

Maiden Holdings currently has a consensus target price of $11.50, suggesting a potential upside of 64.29%. Validus Holdings has a consensus target price of $58.25, suggesting a potential upside of 8.92%. Given Maiden Holdings’ stronger consensus rating and higher possible upside, research analysts plainly believe Maiden Holdings is more favorable than Validus Holdings.

Summary

Maiden Holdings beats Validus Holdings on 8 of the 15 factors compared between the two stocks.

About Maiden Holdings

Maiden Holdings, Ltd. (Maiden) is a holding company. The Company focuses on serving the needs of regional and specialty insurers in the United States, Europe and select other global markets by providing reinsurance solutions designed to support their capital needs. It operates through two segments: Diversified Reinsurance and AmTrust Reinsurance. The Diversified Reinsurance segment consists of a portfolio of property and casualty reinsurance business focusing on regional and specialty property, and casualty insurance companies located, primarily in the United States and Europe. AmTrust is a multinational specialty property and casualty insurance holding company with operations in the United States, Europe and Bermuda. The Company provides reinsurance through its subsidiaries, Maiden Reinsurance Ltd. and Maiden Reinsurance North America, Inc. Internationally, the Company provides insurance sales and distribution services through Maiden Global Holdings, Ltd. and its subsidiaries.

About Validus Holdings

Validus Holdings, Ltd. is a holding company. The Company operates through four segments: Validus Re, Talbot, Western World and AlphaCat. Validus Re is a Bermuda-based reinsurance segment focused treaty reinsurance. Validus Re concentrates on first-party property and other reinsurance risks. Talbot is a specialty insurance segment operating within the Lloyd’s insurance market through Syndicate 1183. The Talbot segment is focused on a range of marine and energy, political lines, commercial property, financial lines, contingency, accident and health and aviation classes of business. Western World is a specialty excess and surplus lines insurance segment operating within the United States commercial market. AlphaCat is a Bermuda-based investment advisor, managing capital from third parties and the Company in insurance linked securities and other investments in the property catastrophe reinsurance space.

Receive News & Ratings for Maiden Holdings Ltd. Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Maiden Holdings Ltd. and related companies with MarketBeat.com's FREE daily email newsletter.

Latest News

Leave a Reply