Comparing XL Group (XL) & Atlas Financial Holdings (NASDAQ:AFH)

Atlas Financial Holdings (NASDAQ: AFH) and XL Group (NYSE:XL) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, earnings, analyst recommendations, dividends, profitability, institutional ownership and valuation.

Profitability

This table compares Atlas Financial Holdings and XL Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Atlas Financial Holdings 1.67% -3.32% -1.03%
XL Group 7.53% 4.88% 1.06%

Dividends

XL Group pays an annual dividend of $0.88 per share and has a dividend yield of 2.0%. Atlas Financial Holdings does not pay a dividend. XL Group pays out 28.6% of its earnings in the form of a dividend. XL Group has raised its dividend for 4 consecutive years.

Earnings & Valuation

This table compares Atlas Financial Holdings and XL Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Atlas Financial Holdings $197.16 million 0.99 -$1.70 million $0.23 70.87
XL Group $11.02 billion 1.04 $1.47 billion $3.08 14.42

XL Group has higher revenue and earnings than Atlas Financial Holdings. XL Group is trading at a lower price-to-earnings ratio than Atlas Financial Holdings, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Atlas Financial Holdings has a beta of 0.88, meaning that its share price is 12% less volatile than the S&P 500. Comparatively, XL Group has a beta of 1.02, meaning that its share price is 2% more volatile than the S&P 500.

Institutional and Insider Ownership

80.3% of Atlas Financial Holdings shares are held by institutional investors. Comparatively, 98.8% of XL Group shares are held by institutional investors. 12.7% of Atlas Financial Holdings shares are held by company insiders. Comparatively, 2.6% of XL Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Atlas Financial Holdings and XL Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Atlas Financial Holdings 0 0 3 0 3.00
XL Group 0 6 6 0 2.50

Atlas Financial Holdings currently has a consensus target price of $18.50, indicating a potential upside of 13.50%. XL Group has a consensus target price of $44.90, indicating a potential upside of 1.10%. Given Atlas Financial Holdings’ stronger consensus rating and higher possible upside, equities analysts plainly believe Atlas Financial Holdings is more favorable than XL Group.

Summary

XL Group beats Atlas Financial Holdings on 12 of the 17 factors compared between the two stocks.

About Atlas Financial Holdings

Atlas Financial Holdings Inc formerly JJR VI Acquisition Corp is a Canada-based company. It is engaged in the business of providing commercial automobile insurance in the United States with a niche market orientation. The Company’s automobile insurance products provide coverage in three areas: liability, accident benefits and physical damage. Liability insurance provides coverage where the insured is responsible for an automobile accident, for the payment for injuries and property damage to third parties. Accident benefit policies or personal injury protection policies provide coverage for loss of income, medical and rehabilitation expenses for insured persons who are injured in an automobile accident, Physical damage coverages provide for the payment of damages to an insured automobile arising from a collision with another object or from other risks. In January 2013, the Company acquired Camelot Services Inc. and its insurance subsidiary, Gateway Insurance Company.

About XL Group

XL Group plc is an insurance and reinsurance company providing property, casualty and specialty products to industrial, commercial and professional firms, insurance companies and other enterprises. The Company operates through two segments: Insurance and Reinsurance. The Company’s Insurance segment is organized into four product divisions: Global Casualty (Casualty); Global Energy Property, & Construction (EPC); Global Professional (Professional), and Global Specialty (Specialty). Its insurance operations provide insurance policies for corporate risks that may require large limits, use of a captive insurance company and the need for a program of locally issued policies. The Reinsurance segment provides casualty, property risk, property catastrophe, specialty, and other reinsurance lines on a global basis with business being written on both a proportional and non-proportional treaty basis, and also on a facultative basis.

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