Investors Title (NASDAQ: ITIC) and State Auto Financial (NASDAQ:STFC) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, profitability, valuation, risk, institutional ownership and earnings.
Insider & Institutional Ownership
42.2% of Investors Title shares are held by institutional investors. Comparatively, 33.8% of State Auto Financial shares are held by institutional investors. 27.5% of Investors Title shares are held by insiders. Comparatively, 1.5% of State Auto Financial shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
Earnings and Valuation
This table compares Investors Title and State Auto Financial’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Investors Title||$161.65 million||2.27||$25.71 million||$13.56||14.30|
|State Auto Financial||$1.42 billion||0.83||$21.00 million||($0.26)||-107.50|
Investors Title has higher earnings, but lower revenue than State Auto Financial. State Auto Financial is trading at a lower price-to-earnings ratio than Investors Title, indicating that it is currently the more affordable of the two stocks.
This table compares Investors Title and State Auto Financial’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|State Auto Financial||-1.60%||-2.62%||-0.77%|
Risk & Volatility
Investors Title has a beta of 0.69, suggesting that its stock price is 31% less volatile than the S&P 500. Comparatively, State Auto Financial has a beta of 0.85, suggesting that its stock price is 15% less volatile than the S&P 500.
Investors Title pays an annual dividend of $1.60 per share and has a dividend yield of 0.8%. State Auto Financial pays an annual dividend of $0.40 per share and has a dividend yield of 1.4%. Investors Title pays out 11.8% of its earnings in the form of a dividend. State Auto Financial pays out -153.8% 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. State Auto Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.
This is a summary of recent recommendations and price targets for Investors Title and State Auto Financial, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|State Auto Financial||0||1||0||0||2.00|
State Auto Financial has a consensus price target of $26.00, indicating a potential downside of 6.98%. Given State Auto Financial’s higher probable upside, analysts clearly believe State Auto Financial is more favorable than Investors Title.
Investors Title beats State Auto Financial on 9 of the 14 factors compared between the two stocks.
Investors Title Company Profile
Investors Title Company is an insurance holding company. The Company, through its subsidiaries, Investors Title Insurance Company (ITIC) and National Investors Title Insurance Company (NITIC), is engaged in issuance of residential and commercial title insurance, Investors Title Insurance Company (ITIC) and National Investors Title Insurance Company (NITIC). The Company also provides tax-deferred real property exchange services through its subsidiaries, Investors Title Exchange Corporation (ITEC) and Investors Title Accommodation Corporation (ITAC); investment management and trust services to individuals, trusts and other entities through its subsidiary, Investors Trust Company (Investors Trust), and management services to title insurance agencies through its subsidiary, Investors Title Management Services (ITMS). In addition, the Company operates in the issuance of residential and commercial title insurance through ITIC and NITIC segment.
State Auto Financial Company Profile
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.
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