Hilltop Holdings (NYSE: HTH) and AmTrust Financial Services (NASDAQ:AFSI) are both mid-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, valuation, dividends, profitabiliy, institutional ownership, analyst recommendations and risk.

Analyst Ratings

This is a summary of current recommendations and price targets for Hilltop Holdings and AmTrust Financial Services, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hilltop Holdings 0 3 1 0 2.25
AmTrust Financial Services 0 1 3 0 2.75

Hilltop Holdings currently has a consensus target price of $29.10, suggesting a potential upside of 11.07%. AmTrust Financial Services has a consensus target price of $19.50, suggesting a potential upside of 19.93%. Given AmTrust Financial Services’ stronger consensus rating and higher probable upside, analysts plainly believe AmTrust Financial Services is more favorable than Hilltop Holdings.

Earnings & Valuation

This table compares Hilltop Holdings and AmTrust Financial Services’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Hilltop Holdings $1.64 billion 1.57 $145.82 million $1.48 17.70
AmTrust Financial Services $5.63 billion 0.49 $608.08 million $2.08 7.82

AmTrust Financial Services has higher revenue and earnings than Hilltop Holdings. AmTrust Financial Services is trading at a lower price-to-earnings ratio than Hilltop Holdings, indicating that it is currently the more affordable of the two stocks.

Dividends

Hilltop Holdings pays an annual dividend of $0.24 per share and has a dividend yield of 0.9%. AmTrust Financial Services pays an annual dividend of $0.68 per share and has a dividend yield of 4.2%. Hilltop Holdings pays out 16.2% of its earnings in the form of a dividend. AmTrust Financial Services pays out 32.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Institutional and Insider Ownership

55.8% of Hilltop Holdings shares are held by institutional investors. Comparatively, 45.4% of AmTrust Financial Services shares are held by institutional investors. 22.5% of Hilltop Holdings shares are held by insiders. Comparatively, 42.8% of AmTrust Financial Services shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Hilltop Holdings and AmTrust Financial Services’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hilltop Holdings 8.33% 7.81% 1.14%
AmTrust Financial Services 7.55% 17.24% 1.99%

Risk & Volatility

Hilltop Holdings has a beta of 1.03, suggesting that its stock price is 3% more volatile than the S&P 500. Comparatively, AmTrust Financial Services has a beta of 1.14, suggesting that its stock price is 14% more volatile than the S&P 500.

Summary

AmTrust Financial Services beats Hilltop Holdings on 11 of the 16 factors compared between the two stocks.

About Hilltop Holdings

Hilltop Holdings Inc. is a financial holding Company. The Company provides business and consumer banking services from offices located throughout Texas through PlainsCapital Bank (the Bank). It has three operating business units, which include PlainsCapital Corporation (PCC) (banking and mortgage origination), Hilltop Securities Holdings LLC (Securities Holdings) (broker-dealer) and PlainsCapital Company (NLC) (insurance). The PCC unit includes the Bank, and its subsidiary, PrimeLending (collectively referred to herein as PlainsCapital), while the Securities Holdings unit includes its broker-dealer operations transferred from the PCC unit, and two entities acquired in the SWS Group, Inc. (SWS) Merger, Hilltop Securities Inc. (Hilltop Securities) and Hilltop Securities Independent Network Inc. (HTS Independent Network). Its segments include Banking, Broker-Dealer, mortgage origination, insurance and Corporate.

About AmTrust Financial Services

Amtrust Financial Services, Inc. (AmTrust) is an insurance holding company. The Company, through its subsidiaries, provides specialty property and casualty insurance focusing on workers’ compensation and commercial package coverage for small business, specialty risk and extended warranty coverage, and property and casualty coverage for middle market business. Its segments include Small Commercial Business, Specialty Risk and Extended Warranty, and Specialty Program. The Small Commercial Business segment is engaged in providing workers’ compensation, commercial package and other commercial insurance lines produced by wholesale agents, retail agents and brokers in the United States. The Specialty Risk and Extended Warranty segment is engaged in providing coverage for consumer and commercial goods and custom designed coverages. The Specialty Program segment is engaged in writing commercial insurance for defined classes of insureds through general and other wholesale agents.

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