Atlantic American Corporation (AAME) versus Fidelity and Guaranty Life (FGL) Critical Survey

Atlantic American Corporation (NASDAQ: AAME) and Fidelity and Guaranty Life (NYSE:FGL) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, valuation, risk, dividends, profitability and analyst recommendations.

Valuation and Earnings

This table compares Atlantic American Corporation and Fidelity and Guaranty Life’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Atlantic American Corporation $169.97 million 0.40 $6.69 million $0.11 30.00
Fidelity and Guaranty Life $1.41 billion 1.29 $550.00 million $3.29 9.48

Fidelity and Guaranty Life has higher revenue and earnings than Atlantic American Corporation. Fidelity and Guaranty Life is trading at a lower price-to-earnings ratio than Atlantic American Corporation, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Atlantic American Corporation and Fidelity and Guaranty Life’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Atlantic American Corporation 1.61% -0.56% -0.19%
Fidelity and Guaranty Life 13.61% 8.00% 0.55%

Institutional & Insider Ownership

5.1% of Atlantic American Corporation shares are owned by institutional investors. Comparatively, 23.4% of Fidelity and Guaranty Life shares are owned by institutional investors. 79.3% of Atlantic American Corporation shares are owned by insiders. Comparatively, 0.6% of Fidelity and Guaranty Life shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Dividends

Atlantic American Corporation pays an annual dividend of $0.02 per share and has a dividend yield of 0.6%. Fidelity and Guaranty Life pays an annual dividend of $0.26 per share and has a dividend yield of 0.8%. Atlantic American Corporation pays out 18.2% of its earnings in the form of a dividend. Fidelity and Guaranty Life pays out 7.9% 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. Fidelity and Guaranty Life is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Atlantic American Corporation and Fidelity and Guaranty Life, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Atlantic American Corporation 0 0 0 0 N/A
Fidelity and Guaranty Life 0 2 0 0 2.00

Fidelity and Guaranty Life has a consensus price target of $26.40, suggesting a potential downside of 15.38%. Given Fidelity and Guaranty Life’s higher probable upside, analysts clearly believe Fidelity and Guaranty Life is more favorable than Atlantic American Corporation.

Risk & Volatility

Atlantic American Corporation has a beta of 0.37, indicating that its share price is 63% less volatile than the S&P 500. Comparatively, Fidelity and Guaranty Life has a beta of 0.89, indicating that its share price is 11% less volatile than the S&P 500.

Summary

Fidelity and Guaranty Life beats Atlantic American Corporation on 12 of the 13 factors compared between the two stocks.

Atlantic American Corporation Company Profile

Atlantic American Corporation is a holding company that operates through its subsidiaries in specialty markets within the life and health, and property and casualty insurance industries. The Company’s principal operating subsidiaries are American Southern Insurance Company and American Safety Insurance Company (together known as American Southern) within the property and casualty insurance industry, and Bankers Fidelity Life Insurance Company and Bankers Fidelity Assurance Company (together known as Bankers Fidelity) within the life and health insurance industry. Each of American Southern and Bankers Fidelity is managed separately based upon the type of products it offers. American Southern’s product lines include business automobile insurance policies, General Liability Insurance policies, Property Insurance policies and Surety Bonds. Products offered by Bankers Fidelity include ordinary and term life insurance, Medicare supplement and other accident and health insurance products.

Fidelity and Guaranty Life Company Profile

Fidelity & Guaranty Life (FGL) is a holding company focused on obtaining controlling equity stakes in companies that operate across various industries. FGL’s primary business is the sale of individual life insurance products and annuities through independent agents, managing general agents, and specialty brokerage firms and in selected institutional markets. FGL’s principal products are deferred annuities (including fixed indexed annuity (FIA) contracts), immediate annuities and life insurance products. FGL markets products through its insurance subsidiaries, Fidelity & Guaranty Life Insurance Company (FGL Insurance) and Fidelity & Guaranty Life Insurance Company of New York (FGL NY Insurance). It distributes and services primarily fixed rate annuities, including FIAs. The Company provides FIA’s for pre-retirement wealth accumulation and post-retirement income management. Its life insurance provides wealth protection and transfer opportunities through indexed universal life products.

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