Fidelity and Guaranty Life (NYSE: FGL) and Emergent Capital (OTCMKTS:EMGC) are both small-cap financials companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, valuation, dividends, analyst recommendations, institutional ownership and profitability.

Profitability

This table compares Fidelity and Guaranty Life and Emergent Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Fidelity and Guaranty Life 14.57% 8.83% 0.63%
Emergent Capital -42.49% -12.80% -3.98%

Valuation & Earnings

This table compares Fidelity and Guaranty Life and Emergent Capital’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Fidelity and Guaranty Life $1.53 billion 1.20 $223.00 million $3.82 8.14
Emergent Capital $1.12 million 55.68 -$49.68 million ($0.98) -0.41

Fidelity and Guaranty Life has higher revenue and earnings than Emergent Capital. Emergent Capital is trading at a lower price-to-earnings ratio than Fidelity and Guaranty Life, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

20.6% of Fidelity and Guaranty Life shares are owned by institutional investors. 0.6% of Fidelity and Guaranty Life shares are owned by company insiders. Comparatively, 33.3% of Emergent Capital shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Risk and Volatility

Fidelity and Guaranty Life has a beta of 0.88, meaning that its share price is 12% less volatile than the S&P 500. Comparatively, Emergent Capital has a beta of 0.04, meaning that its share price is 96% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Fidelity and Guaranty Life and Emergent Capital, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Fidelity and Guaranty Life 0 1 0 0 2.00
Emergent Capital 0 0 1 0 3.00

Fidelity and Guaranty Life currently has a consensus price target of $26.80, suggesting a potential downside of 13.83%. Given Fidelity and Guaranty Life’s higher probable upside, equities research analysts clearly believe Fidelity and Guaranty Life is more favorable than Emergent Capital.

Dividends

Fidelity and Guaranty Life pays an annual dividend of $0.26 per share and has a dividend yield of 0.8%. Emergent Capital does not pay a dividend. Fidelity and Guaranty Life pays out 6.8% of its earnings in the form of a dividend.

Summary

Fidelity and Guaranty Life beats Emergent Capital on 10 of the 15 factors compared between the two stocks.

Fidelity and Guaranty Life Company Profile

Fidelity & Guaranty Life (FGL) is a holding company focused on obtaining controlling equity stakes in companies that operate across various industries. FGL’s primary business is the sale of individual life insurance products and annuities through independent agents, managing general agents, and specialty brokerage firms and in selected institutional markets. FGL’s principal products are deferred annuities (including fixed indexed annuity (FIA) contracts), immediate annuities and life insurance products. FGL markets products through its insurance subsidiaries, Fidelity & Guaranty Life Insurance Company (FGL Insurance) and Fidelity & Guaranty Life Insurance Company of New York (FGL NY Insurance). It distributes and services primarily fixed rate annuities, including FIAs. The Company provides FIA’s for pre-retirement wealth accumulation and post-retirement income management. Its life insurance provides wealth protection and transfer opportunities through indexed universal life products.

Emergent Capital Company Profile

Emergent Capital, Inc., formerly Imperial Holdings, Inc., is a specialty finance company that invests in asset classes, primarily life settlements. The Company, through its subsidiary companies, owns a portfolio of approximately 630 life insurance policies (life settlements). The Company purchases individual policies and portfolios of life insurance policies and manages those assets based on actuarial and market data. The Company provides customized liquidity solutions to owners of illiquid financial assets in two markets, which include life finance and structured settlements. The Company focuses on lending to outright purchases of portfolios, to tertiary trades, as well as individual secondary market purchases. The Company invests in short and long-term life settlement investments.

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