Universal Insurance (NYSE: UVE) and Federated National (NASDAQ:FNHC) are both small-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their profitability, institutional ownership, dividends, risk, earnings, analyst recommendations and valuation.
Earnings & Valuation
This table compares Universal Insurance and Federated National’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Universal Insurance||$751.92 million||1.51||$106.93 million||$2.99||10.87|
|Federated National||$391.66 million||0.55||-$190,000.00||$0.66||25.53|
Universal Insurance has higher revenue and earnings than Federated National. Universal Insurance is trading at a lower price-to-earnings ratio than Federated National, indicating that it is currently the more affordable of the two stocks.
This table compares Universal Insurance and Federated National’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Universal Insurance pays an annual dividend of $0.56 per share and has a dividend yield of 1.7%. Federated National pays an annual dividend of $0.32 per share and has a dividend yield of 1.9%. Universal Insurance pays out 18.7% of its earnings in the form of a dividend. Federated National pays out 48.5% 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.
Institutional and Insider Ownership
74.3% of Universal Insurance shares are owned by institutional investors. Comparatively, 61.5% of Federated National shares are owned by institutional investors. 10.5% of Universal Insurance shares are owned by company insiders. Comparatively, 10.8% of Federated National shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
Volatility and Risk
Universal Insurance has a beta of 1.85, suggesting that its share price is 85% more volatile than the S&P 500. Comparatively, Federated National has a beta of 1.21, suggesting that its share price is 21% more volatile than the S&P 500.
This is a breakdown of current ratings for Universal Insurance and Federated National, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Universal Insurance currently has a consensus price target of $32.00, indicating a potential downside of 1.54%. Federated National has a consensus price target of $22.00, indicating a potential upside of 30.56%. Given Federated National’s higher probable upside, analysts clearly believe Federated National is more favorable than Universal Insurance.
Universal Insurance beats Federated National on 10 of the 14 factors compared between the two stocks.
About Universal Insurance
Universal Insurance Holdings, Inc. (UVE) is a private personal residential homeowners insurance company in Florida. The Company performs substantially all aspects of insurance underwriting, policy issuance, general administration, and claims processing and settlement internally. The Company’s subsidiaries include Universal Property & Casualty Insurance Company (UPCIC) and American Platinum Property and Casualty Insurance Company (APPCIC). UPCIC writes homeowners insurance policies in states, including Alabama, Delaware, Florida, Georgia, Hawaii, Indiana, Maryland, Massachusetts, Michigan, Minnesota, North Carolina, Pennsylvania, South Carolina and Virginia. APPCIC writes homeowners and commercial residential insurance policies in Florida. The Company has developed a suite of applications that provide underwriting, policy and claim administration services, including billing, policy maintenance, inspections, refunds, commissions and data analysis.
About Federated National
Federated National Holding Company (FNHC) is an insurance holding company that controls all steps in the insurance underwriting, distribution and claims processes through its subsidiaries and its contractual relationships with its independent agents and general agents. The Company is authorized to underwrite homeowners’ multi-peril (homeowners), commercial general liability, federal flood, personal auto and various other lines of insurance in Florida and various other states. The Company markets, distributes and services its own and third-party insurers’ products and its other services through a network of independent agents. The Company’s insurance lines of business include Homeowners’ Property and Casualty Insurance, Commercial General Liability, Personal Automobile and Flood. FNIC and MNIC underwrite homeowners’ insurance in Florida, and FNIC underwrites insurance in Alabama, Louisiana and South Carolina. Alabama and Louisiana.
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