Critical Contrast: Amerisafe (AMSF) and Blue Capital Reinsurance (BCRH)

Amerisafe (NASDAQ: AMSF) and Blue Capital Reinsurance (NYSE:BCRH) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, earnings, risk, valuation, profitability and analyst recommendations.

Earnings and Valuation

This table compares Amerisafe and Blue Capital Reinsurance’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Amerisafe $375.21 million 3.05 $46.23 million $3.08 19.30
Blue Capital Reinsurance $49.40 million 2.01 -$43.20 million ($4.94) -2.30

Amerisafe has higher revenue and earnings than Blue Capital Reinsurance. Blue Capital Reinsurance is trading at a lower price-to-earnings ratio than Amerisafe, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Amerisafe has a beta of 0.83, indicating that its stock price is 17% less volatile than the S&P 500. Comparatively, Blue Capital Reinsurance has a beta of -0.03, indicating that its stock price is 103% less volatile than the S&P 500.

Institutional and Insider Ownership

48.0% of Blue Capital Reinsurance shares are held by institutional investors. 1.8% of Amerisafe shares are held by insiders. Comparatively, 0.2% of Blue Capital Reinsurance shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Amerisafe and Blue Capital Reinsurance’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Amerisafe 13.14% 13.55% 4.01%
Blue Capital Reinsurance -98.53% -33.39% -23.91%

Analyst Recommendations

This is a breakdown of current ratings for Amerisafe and Blue Capital Reinsurance, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Amerisafe 0 2 3 0 2.60
Blue Capital Reinsurance 1 2 0 0 1.67

Amerisafe currently has a consensus target price of $61.50, indicating a potential upside of 3.45%. Blue Capital Reinsurance has a consensus target price of $18.00, indicating a potential upside of 58.59%. Given Blue Capital Reinsurance’s higher possible upside, analysts clearly believe Blue Capital Reinsurance is more favorable than Amerisafe.

Dividends

Amerisafe pays an annual dividend of $0.88 per share and has a dividend yield of 1.5%. Blue Capital Reinsurance pays an annual dividend of $1.20 per share and has a dividend yield of 10.6%. Amerisafe pays out 28.6% of its earnings in the form of a dividend. Blue Capital Reinsurance pays out -24.3% 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. Blue Capital Reinsurance is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Amerisafe beats Blue Capital Reinsurance on 11 of the 15 factors compared between the two stocks.

About Amerisafe

AMERISAFE, Inc., an insurance holding company, provides workers' compensation insurance in the United States. Its workers' compensation insurance policies provide benefits to injured employees for temporary or permanent disability, death, and medical and hospital expenses. The company serves small to mid-sized employers involved in construction, trucking, logging and lumber, manufacturing, agriculture, maritime, oil and gas, and other industries through agencies. AMERISAFE, Inc. was incorporated in 1985 and is based in DeRidder, Louisiana.

About Blue Capital Reinsurance

Blue Capital Reinsurance Holdings Ltd., through its subsidiaries, provides collateralized reinsurance in the property catastrophe market in the United States and internationally. It also invests in various insurance-linked securities. The company was founded in 2013 and is headquartered in Pembroke, Bermuda.

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