Analyzing Federated National (FNHC) & Allied World Assurance (AWHHF)

Federated National (NASDAQ: FNHC) and Allied World Assurance (OTCMKTS:AWHHF) are both financials companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, profitability, valuation, risk, earnings and dividends.

Volatility & Risk

Federated National has a beta of 1.29, suggesting that its share price is 29% more volatile than the S&P 500. Comparatively, Allied World Assurance has a beta of 0.7, suggesting that its share price is 30% less volatile than the S&P 500.

Earnings & Valuation

This table compares Federated National and Allied World Assurance’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Federated National $316.38 million 0.61 -$190,000.00 ($0.70) -21.00
Allied World Assurance N/A N/A N/A $2.97 17.36

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

Profitability

This table compares Federated National and Allied World Assurance’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Federated National -2.54% -4.03% -1.06%
Allied World Assurance 12.56% 8.96% 2.42%

Analyst Ratings

This is a breakdown of recent ratings and price targets for Federated National and Allied World Assurance, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Federated National 0 0 1 0 3.00
Allied World Assurance 0 1 0 0 2.00

Federated National presently has a consensus target price of $22.00, indicating a potential upside of 49.66%. Allied World Assurance has a consensus target price of $24.50, indicating a potential downside of 52.47%. Given Federated National’s stronger consensus rating and higher possible upside, equities analysts clearly believe Federated National is more favorable than Allied World Assurance.

Dividends

Federated National pays an annual dividend of $0.32 per share and has a dividend yield of 2.2%. Allied World Assurance pays an annual dividend of $0.52 per share and has a dividend yield of 1.0%. Federated National pays out -45.7% of its earnings in the form of a dividend. Allied World Assurance pays out 17.5% 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. Federated National is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

62.5% of Federated National shares are held by institutional investors. Comparatively, 86.5% of Allied World Assurance shares are held by institutional investors. 10.8% of Federated National shares are held by company insiders. Comparatively, 3.2% of Allied World Assurance shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

Federated National beats Allied World Assurance on 8 of the 14 factors compared between the two stocks.

About Federated National

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.

About Allied World Assurance

Allied World Assurance Company Holdings Ltd is a Germany-based holding company. It provides property, casualty and specialty insurance and reinsurance solutions to clients around the world. The Company operates in three segments: North American Insurance, Global Markets Insurance and Reinsurance. The North American Insurance segment consists of the Company’s direct insurance operations in the United States, Bermuda and Canada. The Global Markets Insurance segment includes all of the Company’s direct insurance operations outside of North America. The Company’s reinsurance segment includes the reinsurance of property, general casualty, professional liability, specialty lines and property catastrophe coverage’s written by other reinsurance companies. The Company leases space in Australia, Bermuda, Canada, Hong Kong, Ireland, Labuan, Singapore, the United Kingdom and the United States for the operation of its North American Insurance, Global Markets Insurance and Reinsurance segments.

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