Mercury General (NYSE: MCY) and Atlas Financial (NASDAQ:AFH) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, valuation, analyst recommendations, institutional ownership, earnings, dividends and profitability.

Analyst Ratings

This is a summary of current ratings and recommmendations for Mercury General and Atlas Financial, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Mercury General 0 0 0 0 N/A
Atlas Financial 0 0 3 0 3.00

Atlas Financial has a consensus price target of $18.50, indicating a potential downside of 1.07%. Given Atlas Financial’s higher possible upside, analysts clearly believe Atlas Financial is more favorable than Mercury General.

Risk and Volatility

Mercury General has a beta of 0.51, indicating that its share price is 49% less volatile than the S&P 500. Comparatively, Atlas Financial has a beta of 0.88, indicating that its share price is 12% less volatile than the S&P 500.

Institutional & Insider Ownership

46.1% of Mercury General shares are held by institutional investors. Comparatively, 79.7% of Atlas Financial shares are held by institutional investors. 34.3% of Mercury General shares are held by insiders. Comparatively, 13.3% of Atlas Financial shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Dividends

Mercury General pays an annual dividend of $2.49 per share and has a dividend yield of 4.6%. Atlas Financial does not pay a dividend. Mercury General pays out 139.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Atlas Financial has raised its dividend for 31 consecutive years.

Earnings & Valuation

This table compares Mercury General and Atlas Financial’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Mercury General $3.23 billion 0.93 $73.04 million $1.79 30.46
Atlas Financial $177.58 million 1.27 $2.64 million $0.14 133.58

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

Profitability

This table compares Mercury General and Atlas Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Mercury General 3.00% 6.47% 2.32%
Atlas Financial 0.92% -2.57% -0.78%

Summary

Mercury General beats Atlas Financial on 8 of the 15 factors compared between the two stocks.

About Mercury General

Mercury General Corporation is an insurance holding company. As of December 31, 2016, the Company and its subsidiaries were engaged in writing personal automobile insurance through 14 insurance subsidiaries in 11 states, principally California. Its segments include Property and Casualty Lines, and Other Lines. Its Property and Casualty segment offers various insurance products to its individual customers and small business customers. Its Other segment offers automobile mechanical breakdown warranties, which are sold through automobile dealerships and credit unions. It also writes homeowners, commercial automobile, commercial property, mechanical breakdown and umbrella insurance. Its insurance policies are sold through independent agents. As of December 31, 2016, it sold its policies through approximately 9,700 independent agents, its owned insurance agencies, Auto Insurance Specialists LLC and PoliSeek AIS Insurance Solutions, Inc., and directly through Internet sales portals.

About Atlas Financial

Atlas Financial Holdings Inc formerly JJR VI Acquisition Corp is a Canada-based company. It is engaged in the business of providing commercial automobile insurance in the United States with a niche market orientation. The Company’s automobile insurance products provide coverage in three areas: liability, accident benefits and physical damage. Liability insurance provides coverage where the insured is responsible for an automobile accident, for the payment for injuries and property damage to third parties. Accident benefit policies or personal injury protection policies provide coverage for loss of income, medical and rehabilitation expenses for insured persons who are injured in an automobile accident, Physical damage coverages provide for the payment of damages to an insured automobile arising from a collision with another object or from other risks. In January 2013, the Company acquired Camelot Services Inc. and its insurance subsidiary, Gateway Insurance Company.

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