Fanhua (NASDAQ: FANH) and Progressive Corporation (The) (NYSE:PGR) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their valuation, risk, analyst recommendations, profitability, institutional ownership, dividends and earnings.

Profitability

This table compares Fanhua and Progressive Corporation (The)’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Fanhua 3.92% 6.11% 4.85%
Progressive Corporation (The) 5.50% 15.62% 3.78%

Institutional & Insider Ownership

8.4% of Fanhua shares are owned by institutional investors. Comparatively, 79.5% of Progressive Corporation (The) shares are owned by institutional investors. 0.6% of Progressive Corporation (The) shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Risk and Volatility

Fanhua has a beta of 0.98, indicating that its stock price is 2% less volatile than the S&P 500. Comparatively, Progressive Corporation (The) has a beta of 0.86, indicating that its stock price is 14% less volatile than the S&P 500.

Dividends

Fanhua pays an annual dividend of $0.10 per share and has a dividend yield of 1.2%. Progressive Corporation (The) pays an annual dividend of $0.68 per share and has a dividend yield of 1.4%. Fanhua pays out 19.6% of its earnings in the form of a dividend. Progressive Corporation (The) pays out 28.8% 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. Progressive Corporation (The) has increased its dividend for 3 consecutive years. Progressive Corporation (The) is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of current ratings and recommmendations for Fanhua and Progressive Corporation (The), as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Fanhua 0 0 0 0 N/A
Progressive Corporation (The) 2 5 5 1 2.38

Progressive Corporation (The) has a consensus price target of $44.31, suggesting a potential downside of 6.19%. Given Progressive Corporation (The)’s higher probable upside, analysts clearly believe Progressive Corporation (The) is more favorable than Fanhua.

Valuation & Earnings

This table compares Fanhua and Progressive Corporation (The)’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Fanhua $783.34 million 0.62 $20.64 million $0.51 16.43
Progressive Corporation (The) $24.97 billion 1.10 $2.37 billion $2.36 20.01

Progressive Corporation (The) has higher revenue and earnings than Fanhua. Fanhua is trading at a lower price-to-earnings ratio than Progressive Corporation (The), indicating that it is currently the more affordable of the two stocks.

Summary

Progressive Corporation (The) beats Fanhua on 14 of the 17 factors compared between the two stocks.

Fanhua Company Profile

Fanhua Inc., formerly CNinsure Inc., is an independent online-to-offline financial services provider in China. The Company distributes a range of property, casualty and life insurance products underwritten by domestic and foreign insurance companies operating in China to individual and institutional customers, and provides insurance claims adjusting services. Its segments include insurance agency, which provides a range of property, casualty and life insurance products to individual customers; insurance brokerage, which provides commercial lines of property and casualty insurance, group life insurance programs and risk management consulting services to businesses and reinsurance brokerage services to insurance companies, and claims adjusting, which provides claims adjusting services to self-insured entities or insurance companies that choose to outsource some or all of their claims adjustment functions. The Company’s distribution and service network covers over 29 provinces in China.

Progressive Corporation (The) Company Profile

The Progressive Corporation is an insurance holding company. The Company’s insurance subsidiaries and affiliates provide personal and commercial automobile and property insurance, other specialty property-casualty insurance and related services. The Company operates through the Personal Lines, Commercial Lines and Property segments. The Company’s Personal Lines segment writes insurance for personal autos, and recreational and other vehicles. The Commercial Lines business writes primary liability, physical damage and other auto-related insurance for automobiles and trucks owned and/or operated predominately by small businesses as a part of the commercial auto market. ASI is a homeowner carrier in the United States, which specializes in personal and commercial property insurance, personal umbrella insurance, and primary and excess flood insurance. The Company’s service business includes Commercial Auto Insurance Procedures/Plans (CAIP) and Commission-based businesses.

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