Financial Analysis: Fanhua (FANH) and Infinity Property and Casualty Corporation (IPCC)

Infinity Property and Casualty Corporation (NASDAQ: IPCC) and Fanhua (NASDAQ:FANH) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitabiliy, risk, institutional ownership, dividends, analyst recommendations, valuation and earnings.

Profitability

This table compares Infinity Property and Casualty Corporation and Fanhua’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Infinity Property and Casualty Corporation 2.97% 6.21% 1.80%
Fanhua 3.92% 6.11% 4.85%

Volatility and Risk

Infinity Property and Casualty Corporation has a beta of 0.83, suggesting that its share price is 17% less volatile than the S&P 500. Comparatively, Fanhua has a beta of 0.98, suggesting that its share price is 2% less volatile than the S&P 500.

Dividends

Infinity Property and Casualty Corporation pays an annual dividend of $2.32 per share and has a dividend yield of 2.5%. Fanhua pays an annual dividend of $0.10 per share and has a dividend yield of 1.1%. Infinity Property and Casualty Corporation pays out 55.9% of its earnings in the form of a dividend. Fanhua pays out 19.6% 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. Infinity Property and Casualty Corporation has increased its dividend for 9 consecutive years. Infinity Property and Casualty Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Infinity Property and Casualty Corporation and Fanhua, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Infinity Property and Casualty Corporation 0 1 1 0 2.50
Fanhua 0 0 0 0 N/A

Infinity Property and Casualty Corporation currently has a consensus target price of $99.50, indicating a potential upside of 6.59%. Given Infinity Property and Casualty Corporation’s higher probable upside, research analysts plainly believe Infinity Property and Casualty Corporation is more favorable than Fanhua.

Valuation & Earnings

This table compares Infinity Property and Casualty Corporation and Fanhua’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Infinity Property and Casualty Corporation $1.55 billion 0.67 $116.87 million $4.15 22.49
Fanhua $778.13 million 0.66 $20.50 million $0.51 17.26

Infinity Property and Casualty Corporation has higher revenue and earnings than Fanhua. Fanhua is trading at a lower price-to-earnings ratio than Infinity Property and Casualty Corporation, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

95.8% of Infinity Property and Casualty Corporation shares are held by institutional investors. Comparatively, 8.5% of Fanhua shares are held by institutional investors. 3.3% of Infinity Property and Casualty Corporation shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Infinity Property and Casualty Corporation beats Fanhua on 12 of the 16 factors compared between the two stocks.

Infinity Property and Casualty Corporation Company Profile

Infinity Property and Casualty Corporation is a holding company. The Company’s segments include Personal Auto, Commercial Vehicle and Classic Collector (its segments are Personal Auto and Commercial Vehicle). The Company writes personal automobile insurance with a concentration on nonstandard automobile insurance, commercial vehicle insurance and classic collector automobile insurance. The Company offers personal and commercial automobile insurance in states, including Arizona, California, Florida and Texas. Personal Automobile is its insurance product, which provides coverage to individuals for liability to others for bodily injury and property damage and for physical damage to an insured’s own vehicle from collision and various other perils. Commercial Vehicle provides coverage to businesses for liability to others for bodily injury and property damage and for physical damage to vehicles from collision. Classic Collector provides protection for classic collectible automobiles.

Fanhua Company Profile

Fanhua Inc., formerly CNinsure Inc., is an independent online-to-offline financial services provider in China. The Company distributes a range of property, casualty and life insurance products underwritten by domestic and foreign insurance companies operating in China to individual and institutional customers, and provides insurance claims adjusting services. Its segments include insurance agency, which provides a range of property, casualty and life insurance products to individual customers; insurance brokerage, which provides commercial lines of property and casualty insurance, group life insurance programs and risk management consulting services to businesses and reinsurance brokerage services to insurance companies, and claims adjusting, which provides claims adjusting services to self-insured entities or insurance companies that choose to outsource some or all of their claims adjustment functions. The Company’s distribution and service network covers over 29 provinces in China.

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