Atlas Financial (NASDAQ: AFH) and Fanhua (NASDAQ:FANH) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, analyst recommendations, valuation, earnings, institutional ownership, profitability and dividends.

Risk & Volatility

Atlas Financial has a beta of 0.88, meaning that its share price is 12% less volatile than the S&P 500. Comparatively, Fanhua has a beta of 1.35, meaning that its share price is 35% more volatile than the S&P 500.

Profitability

This table compares Atlas Financial and Fanhua’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Atlas Financial 0.92% -2.57% -0.78%
Fanhua 7.84% 10.93% 8.61%

Valuation and Earnings

This table compares Atlas Financial and Fanhua’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Atlas Financial $177.58 million 1.29 $2.64 million $0.14 135.72
Fanhua $677.03 million 1.96 $22.61 million $0.94 24.29

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

Analyst Ratings

This is a breakdown of recent ratings and target prices for Atlas Financial and Fanhua, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Atlas Financial 0 0 3 0 3.00
Fanhua 0 0 0 0 N/A

Atlas Financial currently has a consensus target price of $18.50, suggesting a potential downside of 2.63%. Given Atlas Financial’s higher probable upside, research analysts clearly believe Atlas Financial is more favorable than Fanhua.

Insider & Institutional Ownership

79.7% of Atlas Financial shares are held by institutional investors. Comparatively, 15.5% of Fanhua shares are held by institutional investors. 13.3% of Atlas Financial shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

Fanhua pays an annual dividend of $0.30 per share and has a dividend yield of 1.3%. Atlas Financial does not pay a dividend. Fanhua pays out 31.9% of its earnings in the form of a dividend.

Summary

Fanhua beats Atlas Financial on 9 of the 14 factors compared between the two stocks.

Atlas Financial Company Profile

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.

Fanhua Company Profile

Fanhua Inc., formerly CNinsure Inc., is an independent online-to-offline financial services provider in China. The Company distributes a range of property, casualty and life insurance products underwritten by domestic and foreign insurance companies operating in China to individual and institutional customers, and provides insurance claims adjusting services. Its segments include insurance agency, which provides a range of property, casualty and life insurance products to individual customers; insurance brokerage, which provides commercial lines of property and casualty insurance, group life insurance programs and risk management consulting services to businesses and reinsurance brokerage services to insurance companies, and claims adjusting, which provides claims adjusting services to self-insured entities or insurance companies that choose to outsource some or all of their claims adjustment functions. The Company’s distribution and service network covers over 29 provinces in China.

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