Hallmark Financial Services (NASDAQ: HALL) and OneBeacon Insurance Group (NYSE:OB) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, valuation, risk, dividends, analyst recommendations, institutional ownership and earnings.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Hallmark Financial Services and OneBeacon Insurance Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hallmark Financial Services 0 0 0 0 N/A
OneBeacon Insurance Group 0 0 0 0 N/A

Valuation and Earnings

This table compares Hallmark Financial Services and OneBeacon Insurance Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Hallmark Financial Services $385.30 million 0.52 $10.79 million $0.10 109.61
OneBeacon Insurance Group $1.17 billion 1.46 $69.16 million $0.73 24.70

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

Profitability

This table compares Hallmark Financial Services and OneBeacon Insurance Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hallmark Financial Services 0.52% 2.05% 0.47%
OneBeacon Insurance Group 5.88% 5.17% 1.46%

Risk and Volatility

Hallmark Financial Services has a beta of 0.85, indicating that its share price is 15% less volatile than the S&P 500. Comparatively, OneBeacon Insurance Group has a beta of 0.57, indicating that its share price is 43% less volatile than the S&P 500.

Insider and Institutional Ownership

63.0% of Hallmark Financial Services shares are held by institutional investors. Comparatively, 17.3% of OneBeacon Insurance Group shares are held by institutional investors. 29.2% of Hallmark Financial Services shares are held by insiders. Comparatively, 76.6% of OneBeacon Insurance Group shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

OneBeacon Insurance Group pays an annual dividend of $0.84 per share and has a dividend yield of 4.7%. Hallmark Financial Services does not pay a dividend. OneBeacon Insurance Group pays out 115.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

OneBeacon Insurance Group beats Hallmark Financial Services on 9 of the 13 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.

OneBeacon Insurance Group Company Profile

OneBeacon Insurance Group, Ltd. (OneBeacon) is a specialty property and casualty insurance writer that offers a range of insurance products in the United States. The Company’s segments include Specialty Products, Specialty Industries, and Investing, Financing and Corporate. As of December 31, 2016, the Specialty Products segment consisted of 10 underwriting operating segments representing an aggregation based on those that offer products, coverages and services to customers across the United States. As of December 31, 2016, the Specialty Industries segment consisted of six underwriting operating segments representing an aggregation based on those that focus on solving the needs of a particular customer or industry group. The Investing, Financing and Corporate segment includes the investing and financing activities for OneBeacon on a consolidated basis, and certain other activities conducted through the Company and its intermediate subsidiaries.

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