Head-To-Head Analysis: Root (NASDAQ:ROOT) and Universal Insurance (NYSE:UVE)

Root (NASDAQ:ROOT) and Universal Insurance (NYSE:UVE) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their dividends, institutional ownership, profitability, earnings, analyst recommendations, valuation and risk.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Root and Universal Insurance, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Root	0	4	4	0	2.50
Universal Insurance	0	0	1	0	3.00

Root presently has a consensus price target of $53.38, suggesting a potential upside of 36.65%. Universal Insurance has a consensus price target of $25.00, suggesting a potential upside of 18.43%. Given Root’s higher probable upside, equities analysts clearly believe Root is more favorable than Universal Insurance.

Risk and Volatility

Root has a beta of 2.53, suggesting that its stock price is 153% more volatile than the S&P 500. Comparatively, Universal Insurance has a beta of 0.89, suggesting that its stock price is 11% less volatile than the S&P 500.

Profitability

This table compares Root and Universal Insurance’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Root	-9.81%	-50.80%	-6.08%
Universal Insurance	5.60%	21.14%	3.06%

Valuation and Earnings

This table compares Root and Universal Insurance”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Root	$854.20 million	0.68	-$147.40 million	($7.77)	-5.03
Universal Insurance	$1.39 billion	0.43	$66.82 million	$2.55	8.28

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

Insider & Institutional Ownership

59.8% of Root shares are owned by institutional investors. Comparatively, 66.6% of Universal Insurance shares are owned by institutional investors. 11.7% of Root shares are owned by insiders. Comparatively, 17.5% of Universal Insurance shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Universal Insurance beats Root on 10 of the 14 factors compared between the two stocks.

About Root

Root, Inc. provides insurance products and services in the United States. The company offers automobile, homeowners, and renters insurance products. It operates a direct-to-consumer model; and serves customers primarily through mobile applications, as well as through its website. The company's direct distribution channels also cover digital, media, and referral channels, as well as distribution partners and agencies. Root, Inc. was incorporated in 2015 and is headquartered in Columbus, Ohio.

About Universal Insurance

Universal Insurance Holdings, Inc., together with its subsidiaries, operates as an integrated insurance holding company in the United States. It develops, markets, and underwrites insurance products for personal residential insurance, such as homeowners, renters/tenants, condo unit owners, and dwelling/fire; and offers allied lines, coverage for other structures, and personal property, liability, and personal articles coverages. The company also advises on actuarial issues, oversees distribution, administers claims payments, performs policy administration and underwriting, and assists with reinsurance negotiations; places and manages reinsurance programs for the insurance entities; and operates Clovered.com, a digital agency for various carrier partners and utilization of digital applications for adjusting claims. It offers its products through a network of independent agents, as well as direct-to-consumer online solutions, including digital insurance agency. The company was formerly known as Universal Heights, Inc. and changed its name to Universal Insurance Holdings, Inc. in January 2001. Universal Insurance Holdings, Inc. was incorporated in 1990 and is headquartered in Fort Lauderdale, Florida.