Federated National (NASDAQ: FNHC) and Horace Mann Educators (NYSE:HMN) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their dividends, earnings, valuation, risk, profitability, institutional ownership and analyst recommendations.

Dividends

Federated National pays an annual dividend of $0.32 per share and has a dividend yield of 2.0%. Horace Mann Educators pays an annual dividend of $1.10 per share and has a dividend yield of 2.5%. Federated National pays out -45.1% of its earnings in the form of a dividend. Horace Mann Educators pays out 71.4% 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. Federated National has raised its dividend for 8 consecutive years.

Valuation and Earnings

This table compares Federated National and Horace Mann Educators’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Federated National $316.38 million 0.67 -$190,000.00 ($0.71) -22.72
Horace Mann Educators $1.13 billion 1.59 $83.76 million $1.54 28.67

Horace Mann Educators has higher revenue and earnings than Federated National. Federated National is trading at a lower price-to-earnings ratio than Horace Mann Educators, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Federated National and Horace Mann Educators’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Federated National -2.54% -4.03% -1.06%
Horace Mann Educators 5.56% 4.94% 0.61%

Institutional & Insider Ownership

62.3% of Federated National shares are held by institutional investors. Comparatively, 98.3% of Horace Mann Educators shares are held by institutional investors. 10.8% of Federated National shares are held by insiders. Comparatively, 2.1% of Horace Mann Educators shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Federated National and Horace Mann Educators, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Federated National 0 0 1 0 3.00
Horace Mann Educators 0 1 0 0 2.00

Federated National presently has a consensus price target of $22.00, suggesting a potential upside of 36.39%. Horace Mann Educators has a consensus price target of $37.00, suggesting a potential downside of 16.19%. Given Federated National’s stronger consensus rating and higher probable upside, research analysts plainly believe Federated National is more favorable than Horace Mann Educators.

Volatility & Risk

Federated National has a beta of 1.53, suggesting that its stock price is 53% more volatile than the S&P 500. Comparatively, Horace Mann Educators has a beta of 1.17, suggesting that its stock price is 17% more volatile than the S&P 500.

Summary

Horace Mann Educators beats Federated National on 10 of the 17 factors compared between the two stocks.

Federated National Company Profile

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.

Horace Mann Educators Company Profile

Horace Mann Educators Corporation (HMEC) is an insurance holding company. Through its subsidiaries, HMEC markets and underwrites personal lines of property and casualty (primarily personal lines automobile and homeowners) insurance, retirement annuities (primarily tax-qualified products) and life insurance in the United States. The Company’s operating segments include Property and Casualty segment, comprising primarily personal lines automobile and homeowners products; Retirement segment, comprising primarily tax-qualified fixed and variable annuities; Life segment life insurance, and Corporate and Other. It markets and services its products through a sales force of full-time agents supported by its Customer Contact Center. These agents sell HMEC’s products and limited additional third-party vendor products. As of December 31, 2016, its property and casualty subsidiaries and its life insurance subsidiary were licensed to write business in over 48 states and the District of Columbia.

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