Independence (NYSE:IHC) and FGL (NYSE:FG) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, profitability, earnings, dividends, institutional ownership, analyst recommendations and risk.

Insider and Institutional Ownership

18.4% of Independence shares are owned by institutional investors. Comparatively, 71.7% of FGL shares are owned by institutional investors. 7.0% of Independence shares are owned by insiders. Comparatively, 15.1% of FGL shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Independence and FGL’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Independence 8.12% 6.44% 2.75%
FGL 18.33% 5.91% 0.26%

Valuation & Earnings

This table compares Independence and FGL’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Independence $350.77 million 1.58 $28.48 million N/A N/A
FGL $711.00 million 2.65 $13.00 million $1.19 7.14

Independence has higher earnings, but lower revenue than FGL.

Analyst Ratings

This is a breakdown of current ratings and target prices for Independence and FGL, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Independence 0 0 0 0 N/A
FGL 0 3 1 0 2.25

FGL has a consensus target price of $9.75, indicating a potential upside of 14.71%. Given FGL’s higher probable upside, analysts clearly believe FGL is more favorable than Independence.

Risk & Volatility

Independence has a beta of 0.23, indicating that its stock price is 77% less volatile than the S&P 500. Comparatively, FGL has a beta of 0.99, indicating that its stock price is 1% less volatile than the S&P 500.

Dividends

Independence pays an annual dividend of $0.30 per share and has a dividend yield of 0.8%. FGL pays an annual dividend of $0.04 per share and has a dividend yield of 0.5%. FGL pays out 3.4% of its earnings in the form of a dividend. Independence has increased its dividend for 7 consecutive years. Independence is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

FGL beats Independence on 8 of the 15 factors compared between the two stocks.

Independence Company Profile

Independence Holding Company, through its subsidiaries, engages in life and health insurance business. The company's dental portfolio includes indemnity and PPO plans for employer groups of two or more lives, and for individuals within affinity groups; vision plans that offer a flat reimbursement amount for exams and materials; and short-term medical products for people with temporary needs for health coverage. It also provides supplemental products, including hospital indemnity, fixed indemnity limited benefit, critical illness, accident medical coverage, and life insurance products to individuals and families; and pet insurance and occupational accident insurance products. In addition, the company offers group long-term and short-term disability products to employers that provide benefit to their employees; New York short-term disability plan that offers temporary cash payments to replace wages lost; and group term life products, such as group term life, accidental death and dismemberment (AD&D), supplemental life and AD&D, and dependent life products. Independence Holding Company markets its products through general agents, independent brokers, and independent producers in 50 states of the United States, the District of Columbia, the Virgin Islands, and Puerto Rico. The company was founded in 1980 and is headquartered in Stamford, Connecticut.

FGL Company Profile

FGL Holdings sells individual life insurance products and annuities in the United States. The company offers deferred annuities, including fixed indexed annuity contracts and fixed rate annuity contracts; immediate annuities; and life insurance products. It also provides reinsurance on asset intensive, long duration life, and annuity liabilities, such as fixed, deferred and payout annuities, long-term care, group long-term disability, and cash value life insurance. The company sells its products through independent agents, managing general agents, and specialty brokerage firms, as well as various institutional markets. FGL Holdings is headquartered in Des Moines, Iowa.

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