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

Analyst Recommendations

This is a summary of recent recommendations and price targets for Loews and Federated National, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Loews 0 2 1 0 2.33
Federated National 0 0 1 1 3.50

Loews currently has a consensus price target of $53.57, indicating a potential upside of 5.53%. Federated National has a consensus price target of $27.00, indicating a potential upside of 11.16%. Given Federated National’s stronger consensus rating and higher probable upside, analysts clearly believe Federated National is more favorable than Loews.

Volatility and Risk

Loews has a beta of 0.67, suggesting that its stock price is 33% less volatile than the S&P 500. Comparatively, Federated National has a beta of 1.13, suggesting that its stock price is 13% more volatile than the S&P 500.

Dividends

Loews pays an annual dividend of $0.25 per share and has a dividend yield of 0.5%. Federated National pays an annual dividend of $0.32 per share and has a dividend yield of 1.3%. Loews pays out 8.7% of its earnings in the form of a dividend. Federated National pays out 53.3% 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 has increased its dividend for 5 consecutive years. Federated National is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

62.4% of Loews shares are held by institutional investors. Comparatively, 60.0% of Federated National shares are held by institutional investors. 12.3% of Loews shares are held by insiders. Comparatively, 10.8% of Federated National shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Loews 8.15% 4.11% 1.21%
Federated National 4.42% 8.13% 1.84%

Valuation & Earnings

This table compares Loews and Federated National’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Loews $13.74 billion 1.17 $1.16 billion $2.86 17.75
Federated National $391.66 million 0.79 $7.98 million $0.60 40.48

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

Summary

Federated National beats Loews on 9 of the 17 factors compared between the two stocks.

Loews Company Profile

Loews Corporation, through its subsidiaries, provides commercial property and casualty insurance in the United States, Canada, the United Kingdom, Continental Europe, and Singapore. The company offers management and professional liability insurance and risk management services, and other specialized property and casualty coverages; commercial surety and fidelity bonds; and warranty and alternative risk services primarily for vehicles and cell phones. Its commercial property insurance products include standard and excess property, marine, and boiler and machinery coverages; and casualty insurance products comprise workers' compensation, general and product liability, commercial auto, and umbrella coverages. The company also provides loss-sensitive insurance programs; and risk management, information, and claims administration services. It markets its insurance products and services primarily through independent agents, brokers, and managing general underwriters. In addition, the company owns and operates 17 offshore drilling rigs consisting of 4 drillships; and 7 ultra-deepwater, 4 deepwater, and 2 mid-water semisubmersible rigs. Further, it is involved in the transportation and storage of natural gas and natural gas liquids (NGLs). It owns and operates natural gas pipelines covering approximately 13,880 miles of interconnected pipelines; approximately 455 miles of NGL pipelines in Louisiana and Texas; and underground storage fields with aggregate working gas capacity of approximately 205.0 billion cubic feet of natural gas. Additionally, it operates 24 hotels in the United States and Canada. The company was founded in 1954 and is headquartered in New York, New York.

Federated National Company Profile

FedNat Holding Company, through its subsidiaries, engages in insurance underwriting, distribution, and claims processing business in the United States. The company underwrites homeowner's multi-peril, personal automobile, commercial general liability, federal flood, and other lines of insurance. 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.

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