MBIA (NYSE: MBI) and Federated National Holding (NASDAQ:FNHC) are both small-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, earnings, valuation, profitability, analyst recommendations and risk.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for MBIA and Federated National Holding, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MBIA 0 0 2 0 3.00
Federated National Holding 0 2 0 0 2.00

MBIA presently has a consensus target price of $14.50, suggesting a potential upside of 41.60%. Given MBIA’s stronger consensus rating and higher possible upside, equities analysts plainly believe MBIA is more favorable than Federated National Holding.

Dividends

Federated National Holding pays an annual dividend of $0.32 per share and has a dividend yield of 2.3%. MBIA does not pay a dividend. Federated National Holding pays out -168.4% of its earnings in the form of a dividend.

Profitability

This table compares MBIA and Federated National Holding’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MBIA N/A -4.33% -1.20%
Federated National Holding -0.73% -1.07% -0.33%

Valuation & Earnings

This table compares MBIA and Federated National Holding’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
MBIA $237.00 million 5.44 -$1.52 billion ($12.11) -0.85
Federated National Holding $366.50 million 0.49 $870,000.00 ($0.19) -72.74

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

Institutional and Insider Ownership

92.0% of MBIA shares are owned by institutional investors. Comparatively, 62.3% of Federated National Holding shares are owned by institutional investors. 4.1% of MBIA shares are owned by company insiders. Comparatively, 10.8% of Federated National Holding shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Risk & Volatility

MBIA has a beta of 2.45, suggesting that its stock price is 145% more volatile than the S&P 500. Comparatively, Federated National Holding has a beta of 1.6, suggesting that its stock price is 60% more volatile than the S&P 500.

Summary

Federated National Holding beats MBIA on 8 of the 15 factors compared between the two stocks.

MBIA Company Profile

MBIA Inc. is a holding company. The Company, through its subsidiaries, is engaged in the financial guarantee insurance businesses in the industry. The Company manages its business within three segments: United States (U.S.) public finance insurance; corporate, and international and structured finance insurance. The U.S. public finance insurance business is primarily operated through National Public Finance Guarantee Corporation. The corporate segment consists of general corporate activities, including providing general support services, including management, legal, accounting, treasury, information technology, and insurance portfolio surveillance, to other operating businesses, and asset and capital management. The international and structured finance insurance business is primarily operated through MBIA Insurance Corporation and its subsidiaries.

Federated National Holding Company Profile

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.

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