Critical Comparison: XL Group (NYSE:XL) and Atlas Financial Holdings (AFH)

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

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
XL Group	$11.02 billion	1.02	$1.47 billion	$3.08	14.22
Atlas Financial Holdings	$197.16 million	0.98	-$1.70 million	$0.23	69.57

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.

Profitability

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

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

Risk & Volatility

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

Analyst Ratings

This is a summary of current ratings and price targets for XL Group and Atlas Financial Holdings, as provided by MarketBeat.

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

XL Group currently has a consensus price target of $44.90, indicating a potential upside of 2.53%. Atlas Financial Holdings has a consensus price target of $18.50, indicating a potential upside of 15.63%. Given Atlas Financial Holdings’ stronger consensus rating and higher probable upside, analysts clearly believe Atlas Financial Holdings is more favorable than XL Group.

Institutional and Insider Ownership

98.9% of XL Group shares are held by institutional investors. Comparatively, 78.4% of Atlas Financial Holdings shares are held by institutional investors. 2.6% of XL Group shares are held by company insiders. Comparatively, 12.7% of Atlas Financial Holdings shares are held by company 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.

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 increased its dividend for 4 consecutive years.

Summary

XL Group beats Atlas Financial Holdings on 12 of the 16 factors compared between the two stocks.

XL Group Company Profile

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.

Atlas Financial Holdings Company Profile

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.