Genworth Financial (NYSE: GNW) and Atlantic American Corporation (NASDAQ:AAME) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, valuation, institutional ownership, earnings, dividends, profitability and analyst recommendations.

Profitability

This table compares Genworth Financial and Atlantic American Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Genworth Financial -1.66% -1.63% -0.23%
Atlantic American Corporation 1.61% -0.56% -0.19%

Insider and Institutional Ownership

67.6% of Genworth Financial shares are held by institutional investors. Comparatively, 5.1% of Atlantic American Corporation shares are held by institutional investors. 0.3% of Genworth Financial shares are held by company insiders. Comparatively, 79.3% of Atlantic American Corporation shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Dividends

Atlantic American Corporation pays an annual dividend of $0.02 per share and has a dividend yield of 0.6%. Genworth Financial does not pay a dividend. Atlantic American Corporation pays out 18.2% of its earnings in the form of a dividend.

Valuation & Earnings

This table compares Genworth Financial and Atlantic American Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Genworth Financial $8.74 billion 0.20 $852.00 million ($0.30) -11.70
Atlantic American Corporation $169.97 million 0.40 $6.69 million $0.11 30.00

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

Analyst Recommendations

This is a breakdown of recent ratings for Genworth Financial and Atlantic American Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Genworth Financial 0 4 1 0 2.20
Atlantic American Corporation 0 0 0 0 N/A

Genworth Financial presently has a consensus target price of $4.15, indicating a potential upside of 18.16%. Given Genworth Financial’s higher possible upside, research analysts plainly believe Genworth Financial is more favorable than Atlantic American Corporation.

Risk & Volatility

Genworth Financial has a beta of 2.66, meaning that its share price is 166% more volatile than the S&P 500. Comparatively, Atlantic American Corporation has a beta of 0.37, meaning that its share price is 63% less volatile than the S&P 500.

Genworth Financial Company Profile

Genworth Financial, Inc. (Genworth) is a financial security company. The Company provides insurance, wealth management, investment and financial solutions. As of December 31, 2011, the Company had more than 15 million customers, with a presence in more than 25 countries. The Company operates in Insurance, Mortgage Insurance and Corporate and Runoff. The Mortgage Insurance Division includes the business segments, such as International Mortgage Insurance and U.S. Mortgage Insurance. The Corporate and Runoff Division includes the Runoff segment and Corporate and Other activities. In September 2013, Genworth Financial, Inc closed the sale of its Wealth Management business, including Genworth Financial Wealth Management and alternative solutions provider, the Altegris companies, to a partnership of Aquiline Capital Partners and Genstar Capital.

Atlantic American Corporation Company Profile

Atlantic American Corporation is a holding company that operates through its subsidiaries in specialty markets within the life and health, and property and casualty insurance industries. The Company’s principal operating subsidiaries are American Southern Insurance Company and American Safety Insurance Company (together known as American Southern) within the property and casualty insurance industry, and Bankers Fidelity Life Insurance Company and Bankers Fidelity Assurance Company (together known as Bankers Fidelity) within the life and health insurance industry. Each of American Southern and Bankers Fidelity is managed separately based upon the type of products it offers. American Southern’s product lines include business automobile insurance policies, General Liability Insurance policies, Property Insurance policies and Surety Bonds. Products offered by Bankers Fidelity include ordinary and term life insurance, Medicare supplement and other accident and health insurance products.

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