Safety Insurance Group (NASDAQ:SAFT) and Federated National (NASDAQ:FNHC) Critical Contrast

Safety Insurance Group (NASDAQ:SAFT) and Federated National (NASDAQ:FNHC) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, earnings, profitability, analyst recommendations, risk, institutional ownership and valuation.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Safety Insurance Group and Federated National, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Safety Insurance Group 0 0 0 0 N/A
Federated National 0 1 1 0 2.50

Federated National has a consensus target price of $27.00, suggesting a potential upside of 105.32%. Given Federated National’s higher possible upside, analysts clearly believe Federated National is more favorable than Safety Insurance Group.

Institutional & Insider Ownership

81.3% of Safety Insurance Group shares are held by institutional investors. Comparatively, 64.2% of Federated National shares are held by institutional investors. 4.8% of Safety Insurance Group shares are held by insiders. Comparatively, 10.5% of Federated National shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Dividends

Safety Insurance Group pays an annual dividend of $3.20 per share and has a dividend yield of 3.3%. Federated National pays an annual dividend of $0.32 per share and has a dividend yield of 2.4%. Federated National pays out 22.9% of its earnings in the form of a dividend. Safety Insurance Group has raised its dividend for 2 consecutive years. Safety Insurance Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Safety Insurance Group has a beta of 0.62, suggesting that its stock price is 38% less volatile than the S&P 500. Comparatively, Federated National has a beta of 0.83, suggesting that its stock price is 17% less volatile than the S&P 500.

Profitability

This table compares Safety Insurance Group and Federated National’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Safety Insurance Group 12.25% 14.41% 5.55%
Federated National 0.89% 4.07% 0.93%

Valuation & Earnings

This table compares Safety Insurance Group and Federated National’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Safety Insurance Group $836.50 million 1.77 $83.19 million N/A N/A
Federated National $396.09 million 0.43 $14.93 million $1.40 9.39

Safety Insurance Group has higher revenue and earnings than Federated National.

Summary

Safety Insurance Group beats Federated National on 11 of the 15 factors compared between the two stocks.

Safety Insurance Group Company Profile

Safety Insurance Group, Inc. provides private passenger and commercial automobile insurance in Massachusetts, New Hampshire, and Maine, the United States. The company's private passenger automobile policies offer coverage for bodily injury and property damage to others, no-fault personal injury coverage for the insured/insured's car occupants, and physical damage coverage for an insured's own vehicle for collision or other perils. It also provides commercial automobile policies that offer insurance for commercial vehicles used for business purposes, including private passenger-type vehicles, trucks, tractors and trailers, insure individual vehicles, and commercial fleets; and homeowners policies, which provide coverage for homes, condominiums, and apartments for losses to a dwelling and its contents from various perils, and coverage for liability to others arising from ownership or occupancy. In addition, the company offers business owners policies that cover apartments and residential condominiums, restaurants, office condominiums, processing and services businesses, special trade contractors, and wholesalers. Further, it provides personal umbrella policies, which provide personal excess liability coverage over and above the limits of individual automobile, watercraft, and homeowner's insurance policies; and commercial umbrella policies, as well as underwrites dwelling fire insurance for non-owner occupied residences. Additionally, the company offers inland marine coverage for homeowners and business owner policies; and watercraft coverage for small and medium sized pleasure crafts. It distributes its products through independent agents. The company was formerly known as Safety Holdings Inc and changed its name to Safety Insurance Group, Inc. in April 2002. Safety Insurance Group, Inc. was founded in 1979 and is based in Boston, Massachusetts.

Federated National Company Profile

FedNat Holding Company, through its subsidiaries, engages in the insurance underwriting, distribution, and claims processing business in the United States. The company is involved in the homeowners, and fire property and casualty insurance; and personal automobile insurance businesses, as well as commercial general liability and federal flood businesses. 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.

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