Critical Analysis: Fanhua (FANH) and Its Competitors
Fanhua (NASDAQ: FANH) is one of 19 public companies in the “Insurance agents, brokers, & service” industry, but how does it contrast to its rivals? We will compare Fanhua to similar companies based on the strength of its risk, earnings, profitability, analyst recommendations, valuation, institutional ownership and dividends.
Volatility & Risk
Fanhua has a beta of 1.23, meaning that its share price is 23% more volatile than the S&P 500. Comparatively, Fanhua’s rivals have a beta of 0.80, meaning that their average share price is 20% less volatile than the S&P 500.
This is a breakdown of current recommendations for Fanhua and its rivals, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
As a group, “Insurance agents, brokers, & service” companies have a potential upside of 6.35%. Given Fanhua’s rivals higher possible upside, analysts clearly believe Fanhua has less favorable growth aspects than its rivals.
Valuation and Earnings
This table compares Fanhua and its rivals gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Net Income||Price/Earnings Ratio|
|Fanhua||$504.87 million||$88.71 million||20.20|
|Fanhua Competitors||$13.75 billion||$1.05 billion||44.13|
Fanhua’s rivals have higher revenue and earnings than Fanhua. Fanhua is trading at a lower price-to-earnings ratio than its rivals, indicating that it is currently more affordable than other companies in its industry.
Fanhua pays an annual dividend of $1.18 per share and has a dividend yield of 4.1%. Fanhua pays out 82.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. As a group, “Insurance agents, brokers, & service” companies pay a dividend yield of 1.6% and pay out 36.5% of their earnings in the form of a dividend.
Institutional and Insider Ownership
27.9% of Fanhua shares are owned by institutional investors. Comparatively, 63.7% of shares of all “Insurance agents, brokers, & service” companies are owned by institutional investors. 24.2% of shares of all “Insurance agents, brokers, & service” companies are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
This table compares Fanhua and its rivals’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Fanhua rivals beat Fanhua on 8 of the 15 factors compared.
Fanhua Inc. distributes insurance products in China. It operates through two segments, Insurance Agency and Claims Adjusting. The Insurance Agency segment provides property and casualty insurance products, including automobile, individual accident, travel, disability income, commercial property, construction, and other property and casualty products; and life insurance products, such as individual health, individual whole life, individual term life, individual endowment life, and individual annuity, as well as group life and participating insurance products. The Claims Adjusting segment offers pre-underwriting survey, claims adjusting, disposal of residual value, loading and unloading supervision, and consulting services. The company also operates an online insurance platform baoxian.com, which allows customers to search for, and purchase a range of insurance products; Lan Zhanggui, an internet-based all-in-one application; and ehuzhu.com, an online non-profit mutual aid platform. In addition, it provides value-added services As of March 31, 2018, it consisted of 1 insurance sales and service group, 9 insurance agencies, and 3 claims adjusting firms, with 683 sales and service branches and outlets, 579,348 registered independent sales agents, and 1,253 in-house claims adjustors. The company was formerly known as CNinsure Inc. and changed its name to Fanhua Inc. in December 2016. Fanhua Inc. was founded in 1998 and is headquartered in Guangzhou, China.
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