Critical Comparison: Federated National Holding Co Common Stock (FNHC) & Hanover Insurance Group (NYSE:THG)

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Federated National Holding Co Common Stock (NASDAQ: FNHC) and Hanover Insurance Group (NYSE:THG) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, dividends, analyst recommendations, earnings, profitability and risk.

Institutional and Insider Ownership

57.8% of Federated National Holding Co Common Stock shares are owned by institutional investors. Comparatively, 86.0% of Hanover Insurance Group shares are owned by institutional investors. 10.8% of Federated National Holding Co Common Stock shares are owned by company insiders. Comparatively, 1.3% of Hanover Insurance Group shares are owned 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.

Profitability

This table compares Federated National Holding Co Common Stock and Hanover Insurance Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Federated National Holding Co Common Stock 3.40% 6.19% 1.49%
Hanover Insurance Group 3.97% 8.33% 1.62%

Analyst Ratings

This is a breakdown of current recommendations for Federated National Holding Co Common Stock and Hanover Insurance Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Federated National Holding Co Common Stock 0 0 1 1 3.50
Hanover Insurance Group 0 0 1 0 3.00

Federated National Holding Co Common Stock presently has a consensus price target of $22.00, suggesting a potential downside of 3.97%. Hanover Insurance Group has a consensus price target of $91.00, suggesting a potential downside of 26.96%. Given Federated National Holding Co Common Stock’s stronger consensus rating and higher possible upside, research analysts plainly believe Federated National Holding Co Common Stock is more favorable than Hanover Insurance Group.

Risk and Volatility

Federated National Holding Co Common Stock has a beta of 1.1, meaning that its share price is 10% more volatile than the S&P 500. Comparatively, Hanover Insurance Group has a beta of 0.98, meaning that its share price is 2% less volatile than the S&P 500.

Dividends

Federated National Holding Co Common Stock pays an annual dividend of $0.32 per share and has a dividend yield of 1.4%. Hanover Insurance Group pays an annual dividend of $2.16 per share and has a dividend yield of 1.7%. Federated National Holding Co Common Stock pays out 53.3% of its earnings in the form of a dividend. Hanover Insurance Group pays out 45.6% 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 Holding Co Common Stock has increased its dividend for 5 consecutive years and Hanover Insurance Group has increased its dividend for 6 consecutive years. Hanover Insurance Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Federated National Holding Co Common Stock and Hanover Insurance Group’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Federated National Holding Co Common Stock $391.66 million 0.77 $7.98 million $0.60 38.18
Hanover Insurance Group $5.18 billion 1.02 $186.20 million $4.74 26.28

Hanover Insurance Group has higher revenue and earnings than Federated National Holding Co Common Stock. Hanover Insurance Group is trading at a lower price-to-earnings ratio than Federated National Holding Co Common Stock, indicating that it is currently the more affordable of the two stocks.

Summary

Hanover Insurance Group beats Federated National Holding Co Common Stock on 11 of the 17 factors compared between the two stocks.

About Federated National Holding Co Common Stock

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 Hanover Insurance Group

The Hanover Insurance Group, Inc., through its subsidiaries, provides various property and casualty insurance products and services in the United States and internationally. It operates through four segments: Commercial Lines, Personal Lines, Chaucer, and Other. The Commercial Lines segment offers commercial multiple peril, commercial automobile, workers' compensation, and other commercial coverages, such as inland marine, specialty program business, management and professional liability, surety, and specialty property, as well as monoline general liability, umbrella, healthcare, and miscellaneous commercial property insurance products. The Personal Lines segment provides personal automobile and homeowners coverages, as well as other personal coverages, including personal inland marine, umbrella, fire, personal watercraft, earthquake, and other miscellaneous coverages. The Chaucer segment offers marine, aviation, and political insurance; casualty comprising international liability, specialist coverages, and run-off syndicate participations; and energy, property, and assumed reinsurance treaty insurance services. The Other segment markets investment management and advisory services to institutions, pension funds, and other organizations. The company markets its products and services through a network of independent agents and brokers. The Hanover Insurance Group, Inc. was founded in 1852 and is headquartered in Worcester, Massachusetts.

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