Federated National (FNHC) versus Greenlight Capital Re (GLRE) Critical Survey

Federated National (NASDAQ:FNHC) and Greenlight Capital Re (NASDAQ:GLRE) are both small-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, risk, analyst recommendations, profitability, valuation, dividends and institutional ownership.

Earnings & Valuation

This table compares Federated National and Greenlight Capital Re’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Federated National $391.66 million 0.63 $7.98 million $0.60 32.27
Greenlight Capital Re $645.67 million 0.54 -$44.95 million ($1.21) -7.96

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

Institutional & Insider Ownership

62.9% of Federated National shares are owned by institutional investors. Comparatively, 50.0% of Greenlight Capital Re shares are owned by institutional investors. 10.5% of Federated National shares are owned by company insiders. Comparatively, 21.4% of Greenlight Capital Re shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings for Federated National and Greenlight Capital Re, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Federated National 0 0 1 1 3.50
Greenlight Capital Re 0 0 1 0 3.00

Federated National currently has a consensus price target of $27.00, suggesting a potential upside of 39.46%. Greenlight Capital Re has a consensus price target of $25.00, suggesting a potential upside of 159.61%. Given Greenlight Capital Re’s higher probable upside, analysts clearly believe Greenlight Capital Re is more favorable than Federated National.

Risk & Volatility

Federated National has a beta of 1.14, meaning that its stock price is 14% more volatile than the S&P 500. Comparatively, Greenlight Capital Re has a beta of 0.85, meaning that its stock price is 15% less volatile than the S&P 500.

Dividends

Federated National pays an annual dividend of $0.32 per share and has a dividend yield of 1.7%. Greenlight Capital Re does not pay a dividend. Federated National pays out 53.3% of its earnings in the form of a dividend. Federated National has raised its dividend for 6 consecutive years.

Profitability

This table compares Federated National and Greenlight Capital Re’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Federated National 7.61% 14.35% 3.49%
Greenlight Capital Re -125.14% -44.40% -11.46%

Summary

Federated National beats Greenlight Capital Re on 13 of the 17 factors compared between the two stocks.

About Federated National

FedNat Holding Company, through its subsidiaries, engages in insurance underwriting, distribution, and claims processing business in the United States. The company underwrites homeowner's multi-peril, personal automobile, commercial general liability, federal flood, and other lines of insurance. It markets and distributes its own and third-party insurers' products, and other services through a network of independent and general agents. The company was formerly known as Federated National Holding Company and changed its name to FedNat Holding Company in May 2018. FedNat Holding Company was founded in 1991 and is based in Sunrise, Florida.

About Greenlight Capital Re

Greenlight Capital Re, Ltd., through its subsidiaries, engages in the provision of property and casualty reinsurance products and services worldwide. Its frequency business comprises contracts containing small losses emanating from multiple events and enables the clients to increase their underwriting capacity; and severity business includes contracts with the potential for significant losses emanating from one event or various events. The company offers various property reinsurance products and services that include commercial, motor, and personal; casualty reinsurance products and services, which include general liability, motor, professional, and worker's compensation; and specialty reinsurance products and services that include accident and health, financial, marine, and other products. It markets its products through reinsurance brokers. The company was founded in 2004 and is headquartered in Grand Cayman, the Cayman Islands.

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