EMC Insurance Group (NASDAQ: EMCI) and United Fire Group (NASDAQ:UFCS) are both small-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their earnings, dividends, risk, profitability, institutional ownership, valuation and analyst recommendations.
This is a breakdown of recent ratings and target prices for EMC Insurance Group and United Fire Group, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|EMC Insurance Group||0||1||0||0||2.00|
|United Fire Group||0||2||1||0||2.33|
EMC Insurance Group pays an annual dividend of $0.88 per share and has a dividend yield of 3.2%. United Fire Group pays an annual dividend of $1.12 per share and has a dividend yield of 2.6%. EMC Insurance Group pays out 54.3% of its earnings in the form of a dividend. United Fire Group pays out 177.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. EMC Insurance Group is clearly the better dividend stock, given its higher yield and lower payout ratio.
Institutional and Insider Ownership
28.3% of EMC Insurance Group shares are held by institutional investors. Comparatively, 58.4% of United Fire Group shares are held by institutional investors. 4.5% of EMC Insurance Group shares are held by company insiders. Comparatively, 5.8% of United Fire Group shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
Volatility & Risk
EMC Insurance Group has a beta of 0.93, meaning that its share price is 7% less volatile than the S&P 500. Comparatively, United Fire Group has a beta of 0.59, meaning that its share price is 41% less volatile than the S&P 500.
This table compares EMC Insurance Group and United Fire Group’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|EMC Insurance Group||5.32%||4.99%||1.74%|
|United Fire Group||1.49%||1.32%||0.30%|
Valuation & Earnings
This table compares EMC Insurance Group and United Fire Group’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|EMC Insurance Group||$640.91 million||0.93||$46.20 million||$1.62||17.12|
|United Fire Group||$1.14 billion||0.95||$49.90 million||$0.63||69.10|
United Fire Group has higher revenue and earnings than EMC Insurance Group. EMC Insurance Group is trading at a lower price-to-earnings ratio than United Fire Group, indicating that it is currently the more affordable of the two stocks.
EMC Insurance Group Company Profile
EMC Insurance Group Inc. is an insurance holding company. The Company operates through two segments: Property and Casualty Insurance and Reinsurance segment. It conducts its property and casualty insurance operations through its subsidiaries, including EMCASCO Insurance Company, Illinois EMCASCO Insurance Company and Dakota Fire Insurance Company, and its reinsurance operations through its subsidiary, EMC Reinsurance Company. The Company focuses on the sale of commercial lines of property and casualty insurance to small and medium-sized businesses. The Company offered its insurance products in 41 states, as of December 31, 2016. The Company is owned by Employers Mutual Casualty Company (Employers Mutual), a multiple-line property and casualty insurance company. The Company’s insurance agency, EMC Underwriters, LLC (EMC Underwriters), specializes in marketing excess and surplus lines of insurance.
United Fire Group Company Profile
United Fire Group, Inc., formerly United Fire & Casualty Company, is engaged in the business of writing property and casualty insurance and life insurance and selling annuities. The Company operates in two segments: property and casualty insurance, and life insurance. The Company’s property and casualty insurance segment consists of commercial lines insurance, including surety bonds, personal lines insurance and assumed insurance. Its life insurance segment consists of deferred and immediate annuities, universal life insurance products and traditional life insurance products. Its life insurance segment consists solely of the operations of United Life Insurance Company. On February 1, 2012, the Company completed a holding company reorganization of United Fire Group, Inc., United Fire & Casualty Company and UFC MergeCo, Inc. On March 28, 2011, the Company acquired Mercer Insurance Group, Inc. (Mercer Insurance Group).
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