Analyzing Root (NASDAQ:ROOT) and Enstar Group (NASDAQ:ESGR)

Enstar Group (NASDAQ:ESGR) and Root (NASDAQ:ROOT) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, earnings, dividends, profitability, risk, valuation and analyst recommendations.

Risk & Volatility

Enstar Group has a beta of 0.65, suggesting that its share price is 35% less volatile than the S&P 500. Comparatively, Root has a beta of 2.47, suggesting that its share price is 147% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations for Enstar Group and Root, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Enstar Group	0	0	0	0	0.00
Root	0	6	2	1	2.44

Root has a consensus target price of $59.13, suggesting a potential downside of 19.01%. Given Root’s stronger consensus rating and higher possible upside, analysts plainly believe Root is more favorable than Enstar Group.

Insider and Institutional Ownership

81.0% of Enstar Group shares are owned by institutional investors. Comparatively, 59.8% of Root shares are owned by institutional investors. 8.0% of Enstar Group shares are owned by insiders. Comparatively, 11.7% of Root shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Enstar Group and Root”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Enstar Group	$1.31 billion	3.74	$1.12 billion	$66.06	4.87
Root	$1.04 billion	1.06	-$147.40 million	($1.23)	-59.35

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

Profitability

This table compares Enstar Group and Root’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Enstar Group	73.26%	17.33%	4.54%
Root	-1.56%	-9.81%	-1.12%

Summary

Enstar Group beats Root on 9 of the 15 factors compared between the two stocks.

About Enstar Group

Enstar Group Limited acquires and manages insurance and reinsurance companies and portfolios in run-off in Bermuda and internationally. It engages in the run-off property and casualty; other reinsurance; life and catastrophe; and legacy underwriting businesses; as well as investment activities. The company also provides consulting services, including claims inspection, claims validation, reinsurance asset collection, syndicate management, and IT consulting services to the insurance and reinsurance industry. In addition, it offers technical inspections of records and claims investigation, diligence services, finality solutions to Lloyd's syndicates and management, as well as broker replacement, claims resolution, and incentive-based collection services for reinsurers and Lloyd's syndicates. The company was formerly known as Castlewood Holdings Limited and changed its name to Enstar Group Limited in January 2007. Enstar Group Limited was founded in 1993 and is headquartered in Hamilton, Bermuda.

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.