Mercury General Corporation (NYSE: MCY) and Atlas Financial Holdings (NASDAQ:AFH) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their analyst recommendations, risk, dividends, profitability, earnings, institutional ownership and valuation.

Volatility & Risk

Mercury General Corporation has a beta of 0.53, suggesting that its stock price is 47% less volatile than the S&P 500. Comparatively, Atlas Financial Holdings has a beta of 0.89, suggesting that its stock price is 11% less volatile than the S&P 500.

Profitability

This table compares Mercury General Corporation and Atlas Financial Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Mercury General Corporation 3.00% 6.47% 2.32%
Atlas Financial Holdings 0.92% -2.57% -0.78%

Institutional and Insider Ownership

46.9% of Mercury General Corporation shares are owned by institutional investors. Comparatively, 78.6% of Atlas Financial Holdings shares are owned by institutional investors. 34.3% of Mercury General Corporation shares are owned by company insiders. Comparatively, 12.7% of Atlas Financial Holdings shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings for Mercury General Corporation and Atlas Financial Holdings, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Mercury General Corporation 0 0 0 0 N/A
Atlas Financial Holdings 0 0 3 0 3.00

Atlas Financial Holdings has a consensus target price of $18.50, suggesting a potential upside of 0.00%. Given Atlas Financial Holdings’ higher probable upside, analysts clearly believe Atlas Financial Holdings is more favorable than Mercury General Corporation.

Earnings and Valuation

This table compares Mercury General Corporation and Atlas Financial Holdings’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Mercury General Corporation $3.23 billion 0.95 $73.04 million $1.79 30.85
Atlas Financial Holdings $177.58 million 1.25 $2.64 million $0.14 132.15

Mercury General Corporation has higher revenue and earnings than Atlas Financial Holdings. Mercury General Corporation is trading at a lower price-to-earnings ratio than Atlas Financial Holdings, indicating that it is currently the more affordable of the two stocks.

Dividends

Mercury General Corporation pays an annual dividend of $2.49 per share and has a dividend yield of 4.5%. Atlas Financial Holdings does not pay a dividend. Mercury General Corporation pays out 139.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Mercury General Corporation has increased its dividend for 31 consecutive years.

Summary

Mercury General Corporation beats Atlas Financial Holdings on 9 of the 15 factors compared between the two stocks.

About Mercury General Corporation

Mercury General Corporation is an insurance holding company. As of December 31, 2016, the Company and its subsidiaries were engaged in writing personal automobile insurance through 14 insurance subsidiaries in 11 states, principally California. Its segments include Property and Casualty Lines, and Other Lines. Its Property and Casualty segment offers various insurance products to its individual customers and small business customers. Its Other segment offers automobile mechanical breakdown warranties, which are sold through automobile dealerships and credit unions. It also writes homeowners, commercial automobile, commercial property, mechanical breakdown and umbrella insurance. Its insurance policies are sold through independent agents. As of December 31, 2016, it sold its policies through approximately 9,700 independent agents, its owned insurance agencies, Auto Insurance Specialists LLC and PoliSeek AIS Insurance Solutions, Inc., and directly through Internet sales portals.

About Atlas Financial Holdings

Atlas Financial Holdings Inc formerly JJR VI Acquisition Corp is a Canada-based company. It is engaged in the business of providing commercial automobile insurance in the United States with a niche market orientation. The Company’s automobile insurance products provide coverage in three areas: liability, accident benefits and physical damage. Liability insurance provides coverage where the insured is responsible for an automobile accident, for the payment for injuries and property damage to third parties. Accident benefit policies or personal injury protection policies provide coverage for loss of income, medical and rehabilitation expenses for insured persons who are injured in an automobile accident, Physical damage coverages provide for the payment of damages to an insured automobile arising from a collision with another object or from other risks. In January 2013, the Company acquired Camelot Services Inc. and its insurance subsidiary, Gateway Insurance Company.

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