Head to Head Analysis: Employers (NYSE:EIG) versus Atlantic American (NASDAQ:AAME)

Atlantic American (NASDAQ:AAME) and Employers (NYSE:EIG) are both small-cap 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.

Profitability

This table compares Atlantic American and Employers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Atlantic American	-0.77%	-2.25%	-0.59%
Employers	11.99%	9.21%	2.75%

Risk & Volatility

Atlantic American has a beta of 0.69, meaning that its share price is 31% less volatile than the S&P 500. Comparatively, Employers has a beta of 0.56, meaning that its share price is 44% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and price targets for Atlantic American and Employers, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Atlantic American	0	0	0	0	0.00
Employers	0	1	1	0	2.50

Employers has a consensus price target of $58.00, indicating a potential upside of 24.96%. Given Employers’ stronger consensus rating and higher probable upside, analysts clearly believe Employers is more favorable than Atlantic American.

Institutional and Insider Ownership

5.5% of Atlantic American shares are held by institutional investors. Comparatively, 80.5% of Employers shares are held by institutional investors. 80.2% of Atlantic American shares are held by company insiders. Comparatively, 1.5% of Employers 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.

Earnings and Valuation

This table compares Atlantic American and Employers”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Atlantic American	$188.23 million	0.21	-$4.27 million	($0.09)	-21.33
Employers	$880.70 million	1.27	$118.60 million	$4.12	11.27

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

Dividends

Atlantic American pays an annual dividend of $0.02 per share and has a dividend yield of 1.0%. Employers pays an annual dividend of $1.28 per share and has a dividend yield of 2.8%. Atlantic American pays out -22.2% of its earnings in the form of a dividend. Employers pays out 31.1% 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. Employers has increased its dividend for 4 consecutive years. Employers is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Employers beats Atlantic American on 14 of the 17 factors compared between the two stocks.

About Atlantic American

Atlantic American Corporation, through its subsidiaries, provides life and health, and property and casualty insurance products in the United States. It operates through American Southern and Bankers Fidelity segments. The company offers property and casualty insurance products, including commercial automobile insurance coverage for state governments, local municipalities, and other motor pools and fleets; general liability; and inland marine insurance products. It also provides surety bond coverage for subdivision construction; school bus contracts; and performance and payment bonds. In addition, the company offers individual and group whole life insurance products; Medicare supplement insurance products; and other accident and health insurance products comprising various individual and group policies for the payment of standard benefits for the treatment of diagnosed cancer and other critical illnesses, as well as various other products, such as short-term nursing facility care, accident only, hospital indemnity, and disability coverages. It markets its products through independent agents and brokers. The company was founded in 1937 and is based in Atlanta, Georgia. Atlantic American Corporation is a subsidiary of Atlantic American / Delta Group.

About Employers

Employers Holdings, Inc., through its subsidiaries, operates in the commercial property and casualty insurance industry primarily in the United States. The company operates in two segments, Employers and Cerity. It offers workers’ compensation insurance to small businesses in low to medium hazard industries under the Employers and Cerity brands. The company markets its products through local, regional, and national agents and brokers; alternative distribution channels; and national, regional, and local trade groups and associations, as well as directly to customers. Employers Holdings, Inc. was founded in 2000 and is based in Henderson, Nevada.