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

Insider & Institutional Ownership

73.9% of The Navigators Group shares are held by institutional investors. Comparatively, 62.3% of Federated National Holding shares are held by institutional investors. 24.1% of The Navigators Group shares are held by insiders. Comparatively, 10.8% of Federated National Holding shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations and price targets for The Navigators Group and Federated National Holding, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The Navigators Group 0 5 0 0 2.00
Federated National Holding 0 2 1 0 2.33

The Navigators Group currently has a consensus price target of $56.50, suggesting a potential downside of 4.96%. Federated National Holding has a consensus price target of $21.00, suggesting a potential upside of 38.98%. Given Federated National Holding’s stronger consensus rating and higher possible upside, analysts plainly believe Federated National Holding is more favorable than The Navigators Group.

Valuation and Earnings

This table compares The Navigators Group and Federated National Holding’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
The Navigators Group $1.24 billion 1.41 $135.66 million $2.83 21.01
Federated National Holding $366.50 million 0.53 $870,000.00 ($0.19) -79.53

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

Profitability

This table compares The Navigators Group and Federated National Holding’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
The Navigators Group 6.86% 6.53% 1.60%
Federated National Holding -0.73% -1.07% -0.33%

Dividends

The Navigators Group pays an annual dividend of $0.24 per share and has a dividend yield of 0.4%. Federated National Holding pays an annual dividend of $0.32 per share and has a dividend yield of 2.1%. The Navigators Group pays out 8.5% of its earnings in the form of a dividend. Federated National Holding pays out -168.4% 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 is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

The Navigators Group has a beta of 0.79, meaning that its share price is 21% less volatile than the S&P 500. Comparatively, Federated National Holding has a beta of 1.59, meaning that its share price is 59% more volatile than the S&P 500.

Summary

The Navigators Group beats Federated National Holding on 9 of the 15 factors compared between the two stocks.

The Navigators Group Company Profile

The Navigators Group, Inc. is an insurance holding company. The Company is an international insurance company focused on marine insurance. The Company’s segments include U.S. Insurance, International Insurance (Int’l Insurance), Global Reinsurance (GlobalRe) and Corporate. The Company’s Property and Casualty (P&C) insurance business primarily offers general liability coverage, and umbrella and excess liability coverage to commercial enterprises through its U.S. Insurance and Int’l Insurance segments. It also offers reinsurance products through its GlobalRe segment. It distributes its products through international, national and regional, retail and wholesale insurance brokers. The Company’s U.S. Insurance and Int’l Insurance segments consists of three segments, such as Marine, Property and Casualty (P&C) and Professional Liability. Its GlobalRe products include accident & health (A&H), marine, P&C and professional liability.

Federated National Holding Company Profile

Federated National Holding Company (FNHC) is an insurance holding company that controls all steps in the insurance underwriting, distribution and claims processes through its subsidiaries and its contractual relationships with its independent agents and general agents. The Company is authorized to underwrite homeowners’ multi-peril (homeowners), commercial general liability, federal flood, personal auto and various other lines of insurance in Florida and various other states. The Company markets, distributes and services its own and third-party insurers’ products and its other services through a network of independent agents. The Company’s insurance lines of business include Homeowners’ Property and Casualty Insurance, Commercial General Liability, Personal Automobile and Flood. FNIC and MNIC underwrite homeowners’ insurance in Florida, and FNIC underwrites insurance in Alabama, Louisiana and South Carolina. Alabama and Louisiana.

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