State Auto Financial Corporation (NASDAQ: STFC) and Argo Group International Holdings (NASDAQ:AGII) are both small-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, valuation, institutional ownership, earnings, dividends, analyst recommendations and profitabiliy.
Earnings & Valuation
This table compares State Auto Financial Corporation and Argo Group International Holdings’ revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|State Auto Financial Corporation||$1.41 billion||0.77||$29.10 million||$0.32||81.07|
|Argo Group International Holdings||$1.62 billion||1.13||$231.40 million||$5.06||12.04|
Argo Group International Holdings has higher revenue and earnings than State Auto Financial Corporation. Argo Group International Holdings is trading at a lower price-to-earnings ratio than State Auto Financial Corporation, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
State Auto Financial Corporation has a beta of 0.9, indicating that its share price is 10% less volatile than the S&P 500. Comparatively, Argo Group International Holdings has a beta of 0.82, indicating that its share price is 18% less volatile than the S&P 500.
State Auto Financial Corporation pays an annual dividend of $0.40 per share and has a dividend yield of 1.5%. Argo Group International Holdings pays an annual dividend of $1.08 per share and has a dividend yield of 1.8%. State Auto Financial Corporation pays out 125.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Argo Group International Holdings pays out 21.3% of its earnings in the form of a dividend. Argo Group International Holdings is clearly the better dividend stock, given its higher yield and lower payout ratio.
This is a summary of recent recommendations for State Auto Financial Corporation and Argo Group International Holdings, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|State Auto Financial Corporation||0||2||0||0||2.00|
|Argo Group International Holdings||1||2||0||0||1.67|
Argo Group International Holdings has a consensus price target of $62.00, indicating a potential upside of 1.81%. Given Argo Group International Holdings’ higher probable upside, analysts clearly believe Argo Group International Holdings is more favorable than State Auto Financial Corporation.
This table compares State Auto Financial Corporation and Argo Group International Holdings’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|State Auto Financial Corporation||0.99%||-1.55%||-0.47%|
|Argo Group International Holdings||9.53%||6.07%||1.48%|
Insider & Institutional Ownership
32.4% of State Auto Financial Corporation shares are owned by institutional investors. Comparatively, 88.3% of Argo Group International Holdings shares are owned by institutional investors. 1.5% of State Auto Financial Corporation shares are owned by insiders. Comparatively, 5.8% of Argo Group International Holdings shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
Argo Group International Holdings beats State Auto Financial Corporation on 12 of the 14 factors compared between the two stocks.
About State Auto Financial Corporation
State Auto Financial Corporation is a property and casualty insurance holding company. The Company is engaged in writing personal, business and specialty insurance. Its segments include Personal Insurance Segment, Commercial Insurance Segment and Specialty Insurance Segment. Its Personal Insurance Segment include personal auto, homeowners and other personal; Commercial Insurance Segment include commercial auto, small commercial package, middle market commercial, workers’ compensation and other commercial, and Specialty Insurance Segment include Excess & Surplus (E&S) property, E&S casualty and programs. State Auto Financial’s subsidiaries include State Auto Property & Casualty Insurance Company (State Auto P&C), Milbank Insurance Company (Milbank) and State Auto Insurance Company of Ohio (SA Ohio), each of which is a property and casualty insurance company, and Stateco Financial Services, Inc., (Stateco), which provides investment management services to affiliated insurance companies.
About Argo Group International Holdings
Argo Group International Holdings, Ltd. is an underwriter of specialty insurance and reinsurance products in the property and casualty market. The Company operates through four segments: Excess and Surplus Lines, Commercial Specialty, International Specialty and Syndicate 1200. Excess and Surplus Lines segment carriers focus on risks that the standard (admitted) market is unwilling or unable to underwrite. The Excess and Surplus Lines segment consists of two operating platforms: Colony Specialty and Argo Pro. Commercial Specialty segment provides property, casualty and surety coverages designed to meet the insurance needs of businesses within certain markets. International Specialty segment underwrites insurance and reinsurance risks. It operate as Argo Re, the Casualty and Professional Lines unit of Argo Insurance in Bermuda, and Argo Seguros Brazil, S.A. in Brazil. The Syndicate 1200 segment underwrites around the world property, specialty and non-United States liability insurance.
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