Fidelity and Guaranty Life (NYSE: FGL) and National Western Life Group (NASDAQ:NWLI) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, profitabiliy, analyst recommendations, valuation, institutional ownership, risk and dividends.

Insider and Institutional Ownership

23.4% of Fidelity and Guaranty Life shares are owned by institutional investors. Comparatively, 79.5% of National Western Life Group shares are owned by institutional investors. 0.6% of Fidelity and Guaranty Life shares are owned by insiders. Comparatively, 1.0% of National Western Life Group shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Volatility and Risk

Fidelity and Guaranty Life has a beta of 0.9, indicating that its stock price is 10% less volatile than the S&P 500. Comparatively, National Western Life Group has a beta of 1.45, indicating that its stock price is 45% more volatile than the S&P 500.

Profitability

This table compares Fidelity and Guaranty Life and National Western Life Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Fidelity and Guaranty Life 13.16% 9.10% 0.61%
National Western Life Group 13.74% 5.57% 0.81%

Dividends

Fidelity and Guaranty Life pays an annual dividend of $0.26 per share and has a dividend yield of 0.8%. National Western Life Group pays an annual dividend of $0.36 per share and has a dividend yield of 0.1%. Fidelity and Guaranty Life pays out 8.9% of its earnings in the form of a dividend. National Western Life Group pays out 1.2% 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.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Fidelity and Guaranty Life and National Western Life Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Fidelity and Guaranty Life 0 2 0 0 2.00
National Western Life Group 0 0 0 0 N/A

Fidelity and Guaranty Life currently has a consensus target price of $26.40, indicating a potential downside of 15.25%. Given Fidelity and Guaranty Life’s higher probable upside, analysts plainly believe Fidelity and Guaranty Life is more favorable than National Western Life Group.

Valuation and Earnings

This table compares Fidelity and Guaranty Life and National Western Life Group’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Fidelity and Guaranty Life $1.29 billion 1.41 $457.00 million $2.91 10.70
National Western Life Group $757.84 million 1.61 $172.37 million $30.29 11.06

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

Summary

National Western Life Group beats Fidelity and Guaranty Life on 9 of the 14 factors compared between the two stocks.

Fidelity and Guaranty Life Company Profile

Fidelity & Guaranty Life (FGL) is a holding company focused on obtaining controlling equity stakes in companies that operate across various industries. FGL’s primary business is the sale of individual life insurance products and annuities through independent agents, managing general agents, and specialty brokerage firms and in selected institutional markets. FGL’s principal products are deferred annuities (including fixed indexed annuity (FIA) contracts), immediate annuities and life insurance products. FGL markets products through its insurance subsidiaries, Fidelity & Guaranty Life Insurance Company (FGL Insurance) and Fidelity & Guaranty Life Insurance Company of New York (FGL NY Insurance). It distributes and services primarily fixed rate annuities, including FIAs. The Company provides FIA’s for pre-retirement wealth accumulation and post-retirement income management. Its life insurance provides wealth protection and transfer opportunities through indexed universal life products.

National Western Life Group Company Profile

National Western Life Insurance Company (National Western) is a stock life insurance company. The Company operates in two segments: Domestic Insurance Operations and International Insurance Operations. The products marketed under domestic insurance operations are annuities, universal life insurance and traditional life insurance, which include both term and whole life products. National Western’s international operations focus on foreign nationals in upper socioeconomic classes. The Company provides life insurance products for the savings and protection needs of approximately 126,700 policyholders and for the asset accumulation and retirement needs of 139,100 annuity contract holders. National Western offers a portfolio of individual whole life, universal life and term insurance plans, and annuities, including supplementary riders.

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