Hallmark Financial Services (NASDAQ: HALL) and State National Companies (NASDAQ:SNC) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their dividends, institutional ownership, valuation, earnings, analyst recommendations, profitability and risk.

Insider and Institutional Ownership

63.0% of Hallmark Financial Services shares are owned by institutional investors. Comparatively, 57.2% of State National Companies shares are owned by institutional investors. 28.7% of Hallmark Financial Services shares are owned by company insiders. Comparatively, 34.8% of State National Companies shares are owned 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

State National Companies pays an annual dividend of $0.24 per share and has a dividend yield of 1.1%. Hallmark Financial Services does not pay a dividend. State National Companies pays out 18.8% of its earnings in the form of a dividend.

Volatility and Risk

Hallmark Financial Services has a beta of 0.87, indicating that its stock price is 13% less volatile than the S&P 500. Comparatively, State National Companies has a beta of 1.08, indicating that its stock price is 8% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings for Hallmark Financial Services and State National Companies, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hallmark Financial Services 0 0 0 0 N/A
State National Companies 1 2 1 0 2.00

State National Companies has a consensus target price of $38.00, indicating a potential upside of 80.61%. Given State National Companies’ higher possible upside, analysts clearly believe State National Companies is more favorable than Hallmark Financial Services.

Profitability

This table compares Hallmark Financial Services and State National Companies’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hallmark Financial Services 0.52% 2.05% 0.47%
State National Companies 22.98% 17.65% 1.80%

Earnings and Valuation

This table compares Hallmark Financial Services and State National Companies’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Hallmark Financial Services $385.30 million 0.55 $10.79 million $0.10 115.81
State National Companies $235.57 million 3.77 $91.47 million $1.28 16.44

State National Companies has higher revenue, but lower earnings than Hallmark Financial Services. State National Companies is trading at a lower price-to-earnings ratio than Hallmark Financial Services, indicating that it is currently the more affordable of the two stocks.

Summary

State National Companies beats Hallmark Financial Services on 11 of the 15 factors compared between the two stocks.

About Hallmark Financial Services

Hallmark Financial Services, Inc. is an insurance holding company. The Company markets, distributes, underwrites and services its property/casualty insurance products to businesses and individuals. Its business involves marketing, distributing, underwriting and servicing insurance products, as well as providing other insurance related services. Its segments include Standard Commercial Segment, Specialty Commercial Segment and Personal Segment. The Company’s Standard Commercial P&C operating unit primarily underwrites low-severity, short-tailed commercial property/casualty insurance products in the standard market. The Company reinsures a portion of the risk it underwrites in order to control the exposure to losses and to protect capital resources. Its Workers Compensation operating unit specializes in small and middle market workers compensation business. Its Specialty Commercial operating unit offers general aviation and satellite launch insurance products and services.

About State National Companies

State National Companies, Inc. is a specialty provider of property and casualty insurance. The Company’s segments include Program Services, Lender Services and Corporate. In the Program Services segment, the Company operates an issuing carrier (fronting) business to provide insurance capacity access to the United States property and casualty insurance markets. In the Lender Services segment, the Company specializes in providing collateral protection insurance, which insures automobiles held as collateral for loans made by financial institutions. The Company writes its insurance business through its insurance company subsidiaries, which include State National Insurance Company, Inc. (SNIC), National Specialty Insurance Company (NSIC) and United Specialty Insurance Company (USIC). As of December 31, 2016, SNIC and NSIC were admitted carriers licensed to write property and casualty business in all 50 states and the District of Columbia. USIC is an admitted carrier in Delaware.

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