Federated National (NASDAQ: FNHC) and James River Group (NASDAQ:JRVR) are both small-cap financials companies, but which is the superior stock? We will contrast the two companies based on the strength of their dividends, risk, earnings, profitability, valuation, analyst recommendations and institutional ownership.

Earnings and Valuation

This table compares Federated National and James River Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Federated National $316.38 million 0.67 -$190,000.00 ($0.70) -23.23
James River Group $586.23 million 1.82 $74.47 million $2.28 15.85

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

Volatility & Risk

Federated National has a beta of 1.52, indicating that its stock price is 52% more volatile than the S&P 500. Comparatively, James River Group has a beta of 0.5, indicating that its stock price is 50% less volatile than the S&P 500.

Dividends

Federated National pays an annual dividend of $0.32 per share and has a dividend yield of 2.0%. James River Group pays an annual dividend of $3.20 per share and has a dividend yield of 8.9%. Federated National pays out -45.7% of its earnings in the form of a dividend. James River Group pays out 140.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Federated National and James River Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Federated National -2.54% -4.03% -1.06%
James River Group 8.98% 9.36% 2.66%

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Federated National and James River Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Federated National 0 0 1 0 3.00
James River Group 0 2 2 0 2.50

Federated National currently has a consensus target price of $22.00, suggesting a potential upside of 35.30%. James River Group has a consensus target price of $45.00, suggesting a potential upside of 24.55%. Given Federated National’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Federated National is more favorable than James River Group.

Institutional & Insider Ownership

62.3% of Federated National shares are owned by institutional investors. Comparatively, 96.2% of James River Group shares are owned by institutional investors. 10.8% of Federated National shares are owned by company insiders. Comparatively, 41.0% of James River Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

James River Group beats Federated National on 12 of the 16 factors compared between the two stocks.

About Federated National

Federated National Holding Company (FNHC) is an insurance holding company that controls all steps in the insurance underwriting, distribution and claims processes through its subsidiaries and its contractual relationships with its independent agents and general agents. The Company is authorized to underwrite homeowners’ multi-peril (homeowners), commercial general liability, federal flood, personal auto and various other lines of insurance in Florida and various other states. The Company markets, distributes and services its own and third-party insurers’ products and its other services through a network of independent agents. The Company’s insurance lines of business include Homeowners’ Property and Casualty Insurance, Commercial General Liability, Personal Automobile and Flood. FNIC and MNIC underwrite homeowners’ insurance in Florida, and FNIC underwrites insurance in Alabama, Louisiana and South Carolina. Alabama and Louisiana.

About James River Group

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.

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