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

Analyst Recommendations

This is a summary of current ratings for United Fire Group and Horace Mann Educators, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
United Fire Group 0 2 1 0 2.33
Horace Mann Educators 0 1 0 0 2.00

United Fire Group presently has a consensus target price of $46.33, suggesting a potential downside of 0.66%. Horace Mann Educators has a consensus target price of $37.00, suggesting a potential downside of 17.78%. Given United Fire Group’s stronger consensus rating and higher possible upside, equities analysts plainly believe United Fire Group is more favorable than Horace Mann Educators.

Profitability

This table compares United Fire Group and Horace Mann Educators’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
United Fire Group 1.49% 1.32% 0.30%
Horace Mann Educators 5.56% 4.94% 0.61%

Dividends

United Fire Group pays an annual dividend of $1.12 per share and has a dividend yield of 2.4%. Horace Mann Educators pays an annual dividend of $1.10 per share and has a dividend yield of 2.4%. United Fire Group pays out 177.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Horace Mann Educators pays out 71.4% of its earnings in the form of a dividend. Horace Mann Educators has raised its dividend for 8 consecutive years. Horace Mann Educators is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

United Fire Group has a beta of 0.7, meaning that its share price is 30% less volatile than the S&P 500. Comparatively, Horace Mann Educators has a beta of 1.17, meaning that its share price is 17% more volatile than the S&P 500.

Valuation and Earnings

This table compares United Fire Group and Horace Mann Educators’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
United Fire Group $1.14 billion 1.02 $49.90 million $0.63 74.03
Horace Mann Educators $1.13 billion 1.62 $83.76 million $1.54 29.22

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

Institutional and Insider Ownership

58.4% of United Fire Group shares are held by institutional investors. Comparatively, 98.3% of Horace Mann Educators shares are held by institutional investors. 5.8% of United Fire Group shares are held by insiders. Comparatively, 2.1% of Horace Mann Educators shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

Horace Mann Educators beats United Fire Group on 11 of the 17 factors compared between the two stocks.

United Fire Group Company Profile

United Fire Group, Inc., formerly United Fire & Casualty Company, is engaged in the business of writing property and casualty insurance and life insurance and selling annuities. The Company operates in two segments: property and casualty insurance, and life insurance. The Company’s property and casualty insurance segment consists of commercial lines insurance, including surety bonds, personal lines insurance and assumed insurance. Its life insurance segment consists of deferred and immediate annuities, universal life insurance products and traditional life insurance products. Its life insurance segment consists solely of the operations of United Life Insurance Company. On February 1, 2012, the Company completed a holding company reorganization of United Fire Group, Inc., United Fire & Casualty Company and UFC MergeCo, Inc. On March 28, 2011, the Company acquired Mercer Insurance Group, Inc. (Mercer Insurance Group).

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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