Reviewing Hallmark Financial Services (HALL) & Berkshire Hathaway (BRK.B)

Hallmark Financial Services (NASDAQ: HALL) and Berkshire Hathaway (NYSE:BRK.B) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, institutional ownership, analyst recommendations, profitability, earnings, dividends and risk.

Analyst Recommendations

This is a summary of current ratings and price targets for Hallmark Financial Services and Berkshire Hathaway, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hallmark Financial Services 0 1 0 0 2.00
Berkshire Hathaway 1 1 2 0 2.25

Berkshire Hathaway has a consensus price target of $201.33, indicating a potential downside of 4.20%. Given Berkshire Hathaway’s stronger consensus rating and higher probable upside, analysts plainly believe Berkshire Hathaway is more favorable than Hallmark Financial Services.

Earnings and Valuation

This table compares Hallmark Financial Services and Berkshire Hathaway’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Hallmark Financial Services $375.95 million 0.50 $6.52 million ($0.26) -39.92
Berkshire Hathaway $223.60 billion 2.32 $24.07 billion $11,356.59 0.02

Berkshire Hathaway has higher revenue and earnings than Hallmark Financial Services. Hallmark Financial Services is trading at a lower price-to-earnings ratio than Berkshire Hathaway, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Hallmark Financial Services has a beta of 0.84, meaning that its stock price is 16% less volatile than the S&P 500. Comparatively, Berkshire Hathaway has a beta of 0.87, meaning that its stock price is 13% less volatile than the S&P 500.

Profitability

This table compares Hallmark Financial Services and Berkshire Hathaway’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hallmark Financial Services -1.19% -0.42% -0.09%
Berkshire Hathaway 7.73% 5.17% 2.36%

Institutional & Insider Ownership

65.0% of Hallmark Financial Services shares are owned by institutional investors. Comparatively, 38.1% of Berkshire Hathaway shares are owned by institutional investors. 28.7% of Hallmark Financial Services shares are owned by company insiders. Comparatively, 6.1% of Berkshire Hathaway shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Berkshire Hathaway beats Hallmark Financial Services on 12 of the 14 factors compared between the two stocks.

Hallmark Financial Services Company Profile

Hallmark Financial Services, Inc. is an insurance holding company. The Company markets, distributes, underwrites and services its property/casualty insurance products to businesses and individuals. Its business involves marketing, distributing, underwriting and servicing insurance products, as well as providing other insurance related services. Its segments include Standard Commercial Segment, Specialty Commercial Segment and Personal Segment. The Company’s Standard Commercial P&C operating unit primarily underwrites low-severity, short-tailed commercial property/casualty insurance products in the standard market. The Company reinsures a portion of the risk it underwrites in order to control the exposure to losses and to protect capital resources. Its Workers Compensation operating unit specializes in small and middle market workers compensation business. Its Specialty Commercial operating unit offers general aviation and satellite launch insurance products and services.

Berkshire Hathaway Company Profile

Berkshire Hathaway Inc. is a holding company owning subsidiaries engaged in various business activities. Its segments include Insurance, such as GEICO, Berkshire Hathaway Primary Group, General Re Corporation and Berkshire Hathaway Reinsurance Group; Burlington Northern Santa Fe, LLC, which is engaged in the operation of the railroad system; Berkshire Hathaway Energy, which includes regulated electric and gas utility; Manufacturing, which includes manufacturers of various products, including industrial, consumer and building products; McLane Company, which is engaged in the wholesale distribution of groceries and non-food items; Service and retailing, which includes providers of various services, including fractional aircraft ownership programs, aviation pilot training and various retailing businesses, and Finance and financial products, which includes manufactured housing and related consumer financing, transportation equipment, manufacturing and leasing, and furniture leasing.

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