James River Group Holdings (NASDAQ: JRVR) and State National Companies (NASDAQ:SNC) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, dividends, institutional ownership, valuation, risk, analyst recommendations and earnings.

Insider and Institutional Ownership

96.0% of James River Group Holdings shares are owned by institutional investors. Comparatively, 58.0% of State National Companies shares are owned by institutional investors. 41.0% of James River Group Holdings shares are owned by company insiders. Comparatively, 32.2% of State National Companies shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

James River Group Holdings pays an annual dividend of $1.20 per share and has a dividend yield of 3.0%. State National Companies pays an annual dividend of $0.24 per share and has a dividend yield of 1.1%. James River Group Holdings pays out 45.3% of its earnings in the form of a dividend. State National Companies pays out 18.8% 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.

Profitability

This table compares James River Group Holdings and State National Companies’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
James River Group Holdings 11.45% 10.80% 3.21%
State National Companies 22.98% 17.65% 1.80%

Analyst Ratings

This is a breakdown of current recommendations and price targets for James River Group Holdings and State National Companies, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
James River Group Holdings 0 1 2 0 2.67
State National Companies 1 1 2 0 2.25

James River Group Holdings presently has a consensus target price of $44.00, indicating a potential upside of 8.91%. State National Companies has a consensus target price of $30.00, indicating a potential upside of 43.47%. Given State National Companies’ higher possible upside, analysts clearly believe State National Companies is more favorable than James River Group Holdings.

Volatility and Risk

James River Group Holdings has a beta of 0.55, meaning that its share price is 45% less volatile than the S&P 500. Comparatively, State National Companies has a beta of 1.09, meaning that its share price is 9% more volatile than the S&P 500.

Earnings & Valuation

This table compares James River Group Holdings and State National Companies’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
James River Group Holdings $699.18 million 1.71 $97.44 million $2.65 15.25
State National Companies $235.57 million 3.74 $91.47 million $1.28 16.34

James River Group Holdings has higher revenue and earnings than State National Companies. James River Group Holdings is trading at a lower price-to-earnings ratio than State National Companies, indicating that it is currently the more affordable of the two stocks.

Summary

James River Group Holdings beats State National Companies on 8 of the 15 factors compared between the two stocks.

About James River Group Holdings

James River Group Holdings, Ltd. (JRG Holdings) is an insurance and reinsurance holding company. The Company operates through four segments: Excess and Surplus Lines, Specialty Admitted Insurance, Casualty Reinsurance, and Corporate and Other. The Excess and Surplus Lines segment offers commercial excess and surplus lines liability and excess property insurance products. The Specialty Admitted Insurance segment offers workers’ compensation insurance coverage, as well as specialty admitted fronting and program business. The Casualty Reinsurance segment offers commercial liability and non-catastrophe property reinsurance to the United States insurance companies and to its the United States-based insurance subsidiaries. The Corporate and Other segment consists of certain management and treasury activities of James River Group, Inc., James River Group Holdings UK Limited and JRG Holdings. It owns six insurance companies focused on specialty insurance niches and a reinsurance company.

About State National Companies

State National Companies, Inc. is a specialty provider of property and casualty insurance. The Company’s segments include Program Services, Lender Services and Corporate. In the Program Services segment, the Company operates an issuing carrier (fronting) business to provide insurance capacity access to the United States property and casualty insurance markets. In the Lender Services segment, the Company specializes in providing collateral protection insurance, which insures automobiles held as collateral for loans made by financial institutions. The Company writes its insurance business through its insurance company subsidiaries, which include State National Insurance Company, Inc. (SNIC), National Specialty Insurance Company (NSIC) and United Specialty Insurance Company (USIC). As of December 31, 2016, SNIC and NSIC were admitted carriers licensed to write property and casualty business in all 50 states and the District of Columbia. USIC is an admitted carrier in Delaware.

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