Federated National (NASDAQ:FNHC) and Tokio Marine (OTCMKTS:TKOMY) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, analyst recommendations, dividends, valuation, institutional ownership, profitability and risk.

Profitability

This table compares Federated National and Tokio Marine’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Federated National 0.89% 4.07% 0.93%
Tokio Marine N/A N/A N/A

Dividends

Federated National pays an annual dividend of $0.32 per share and has a dividend yield of 2.3%. Tokio Marine pays an annual dividend of $1.34 per share and has a dividend yield of 2.6%. Federated National pays out 22.9% of its earnings in the form of a dividend. Tokio Marine pays out 36.9% 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.

Earnings and Valuation

This table compares Federated National and Tokio Marine’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Federated National $396.09 million 0.44 $14.93 million $1.40 9.80
Tokio Marine $49.83 billion 0.76 $2.56 billion $3.63 13.98

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

Risk and Volatility

Federated National has a beta of 0.84, suggesting that its share price is 16% less volatile than the S&P 500. Comparatively, Tokio Marine has a beta of 0.55, suggesting that its share price is 45% less volatile than the S&P 500.

Institutional and Insider Ownership

64.3% of Federated National shares are held by institutional investors. Comparatively, 0.1% of Tokio Marine shares are held by institutional investors. 10.5% of Federated National 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.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Federated National and Tokio Marine, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Federated National 0 1 1 0 2.50
Tokio Marine 0 0 0 0 N/A

Federated National presently has a consensus price target of $27.00, suggesting a potential upside of 96.79%. Given Federated National’s higher possible upside, equities research analysts plainly believe Federated National is more favorable than Tokio Marine.

Summary

Federated National beats Tokio Marine on 9 of the 15 factors compared between the two stocks.

About Federated National

FedNat Holding Company, through its subsidiaries, engages in the insurance underwriting, distribution, and claims processing business in the United States. The company is involved in the homeowners, and fire property and casualty insurance; and personal automobile insurance businesses, as well as commercial general liability and federal flood businesses. It markets and distributes its own and third-party insurers' products, and other services through a network of independent and general agents. The company was formerly known as Federated National Holding Company and changed its name to FedNat Holding Company in May 2018. FedNat Holding Company was founded in 1991 and is based in Sunrise, Florida.

About Tokio Marine

Tokio Marine Holdings, Inc., together with its subsidiaries, engages in non-life and life insurance, international insurance, and financial and general businesses worldwide. The company provides business, fire, Internet and mobile, rental housing, and natural catastrophe risk insurance services, as well as insurance for retail and corporate fields. It also provides property investment, insurance agency and risk consulting, human resource, in-home care and nursing care information, healthcare/medical, call center, and real estate-related services. Tokio Marine Holdings, Inc. serves individuals, small to medium sized non-profit organizations, schools, or churches. The company was formerly known as Millea Holdings, Inc. and changed its name to Tokio Marine Holdings, Inc. in 2008. Tokio Marine Holdings, Inc. was founded in 2002 and is headquartered in Tokyo, Japan.

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