Critical Comparison: First Acceptance (FAC) and Atlas Financial (AFH)

First Acceptance (NYSE:FAC) and Atlas Financial (NASDAQ:AFH) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, earnings, dividends, risk, valuation, analyst recommendations and institutional ownership.

Profitability

This table compares First Acceptance and Atlas Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
First Acceptance N/A N/A N/A
Atlas Financial -16.44% -48.83% -9.40%

Institutional & Insider Ownership

19.7% of First Acceptance shares are held by institutional investors. Comparatively, 75.1% of Atlas Financial shares are held by institutional investors. 9.5% of First Acceptance shares are held by insiders. Comparatively, 15.1% of Atlas Financial shares are held by 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 First Acceptance and Atlas Financial’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
First Acceptance N/A N/A N/A N/A N/A
Atlas Financial $221.98 million 0.50 -$38.81 million ($3.62) -2.56

First Acceptance has higher earnings, but lower revenue than Atlas Financial.

Analyst Ratings

This is a summary of recent ratings and recommmendations for First Acceptance and Atlas Financial, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Acceptance 0 0 0 0 N/A
Atlas Financial 0 1 1 0 2.50

Atlas Financial has a consensus target price of $17.00, suggesting a potential upside of 83.59%. Given Atlas Financial’s higher probable upside, analysts clearly believe Atlas Financial is more favorable than First Acceptance.

Summary

Atlas Financial beats First Acceptance on 5 of the 8 factors compared between the two stocks.

First Acceptance Company Profile

First Acceptance Corporation, through its subsidiaries, operates as a retailer, servicer, and underwriter of non-standard personal automobile insurance and other ancillary products in the United States. The company operates through two segments, Insurance, and Real Estate and Corporate. It issues automobile insurance policies to individuals who are categorized as non-standard based primarily on their inability or unwillingness to obtain insurance coverage from standard carriers due to various factors, including their payment history or need for monthly payment plans, failure to maintain continuous insurance coverage, or driving record. The company also offers optional products that provide ancillary reimbursements and benefits in the event of an automobile accident, such as products that offer reimbursements for medical expenses and hospital stays as a result of injuries sustained in an automobile accident, automobile towing and rental, and ambulance services; and underwrites a tenant homeowner policy that provides contents and liability coverage to customers who are renters. In addition, it engages in the disposition of real estate held for sale. The company markets its products under the Acceptance Insurance brand name. It primarily distributes its products through its retail locations, as well as through call center and Internet. As of December 31, 2016, the company leased and operated 355 retail locations a call center. First Acceptance Corporation was founded in 1969 and is based in Nashville, Tennessee.

Atlas Financial Company Profile

Atlas Financial Holdings, Inc., through its subsidiaries, engages in underwriting commercial automobile insurance policies in the United States. Its automobile insurance products provide insurance coverage in three primary areas, including liability, accident benefits, and physical damage. The company focuses on the light commercial automobile sector, including taxi cabs, non-emergency para-transit, limousine, livery, and business autos. The company distributes its insurance products through a network of retail independent agents. Atlas Financial Holdings, Inc. is headquartered in Schaumburg, Illinois.

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