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 superior business? We will contrast the two companies based on the strength of their dividends, risk, valuation, institutional ownership, earnings, analyst recommendations and profitability.

Institutional and Insider 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 company insiders. Comparatively, 17.5% of Universal Insurance shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Root and Universal Insurance”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Root	$455.00 million	1.24	-$147.40 million	($7.77)	-4.86
Universal Insurance	$1.39 billion	0.44	$66.82 million	$2.55	8.44

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.

Risk & Volatility

Root has a beta of 2.54, meaning that its share price is 154% more volatile than the S&P 500. Comparatively, Universal Insurance has a beta of 0.89, meaning that its share 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%

Analyst Recommendations

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

	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 target price of $53.38, indicating a potential upside of 41.43%. Universal Insurance has a consensus target price of $25.00, indicating a potential upside of 16.23%. Given Root’s higher probable upside, equities analysts clearly believe Root is more favorable than Universal Insurance.

Summary

Universal Insurance beats Root on 9 of the 13 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.