Analyzing Atlantic American Corporation (AAME) & AMERISAFE (AMSF)

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

Volatility and Risk

Atlantic American Corporation has a beta of 0.36, indicating that its stock price is 64% less volatile than the S&P 500. Comparatively, AMERISAFE has a beta of 0.89, indicating that its stock price is 11% less volatile than the S&P 500.

Dividends

Atlantic American Corporation pays an annual dividend of $0.02 per share and has a dividend yield of 0.6%. AMERISAFE pays an annual dividend of $0.80 per share and has a dividend yield of 1.4%. Atlantic American Corporation pays out 18.2% of its earnings in the form of a dividend. AMERISAFE pays out 23.3% 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.

Analyst Recommendations

This is a breakdown of current ratings for Atlantic American Corporation and AMERISAFE, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Atlantic American Corporation 0 0 0 0 N/A
AMERISAFE 0 0 1 0 3.00

AMERISAFE has a consensus target price of $64.00, indicating a potential upside of 13.78%. Given AMERISAFE’s higher possible upside, analysts plainly believe AMERISAFE is more favorable than Atlantic American Corporation.

Profitability

This table compares Atlantic American Corporation and AMERISAFE’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%
AMERISAFE 17.17% 14.04% 4.32%

Insider and Institutional Ownership

5.1% of Atlantic American Corporation shares are held by institutional investors. Comparatively, 99.5% of AMERISAFE shares are held by institutional investors. 79.3% of Atlantic American Corporation shares are held by insiders. Comparatively, 2.2% of AMERISAFE shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Atlantic American Corporation and AMERISAFE’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Atlantic American Corporation $169.97 million 0.41 $6.69 million $0.11 30.91
AMERISAFE $384.23 million 2.81 $95.81 million $3.43 16.40

AMERISAFE has higher revenue and earnings than Atlantic American Corporation. AMERISAFE 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.

Summary

AMERISAFE beats Atlantic American Corporation on 12 of the 15 factors compared between the two stocks.

About Atlantic American Corporation

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.

About AMERISAFE

Amerisafe, Inc. is an insurance holding company. The Company is engaged in providing workers’ compensation insurance focused on small to mid-sized employers engaged in hazardous industries, principally construction, trucking, logging and lumber, manufacturing, and agriculture. It is engaged in underwriting the workers’ compensation exposures inherent in these industries. It provides coverage to employers under state and federal workers’ compensation laws. The Company’s workers’ compensation insurance policies provide benefits to injured employees for, temporary or permanent disability, death and medical and hospital expenses. The Company provides safety services at employers’ workplaces as a component of its underwriting process. It utilizes claims management practices. In addition to its voluntary workers’ compensation business, it underwrites workers’ compensation policies for employers assigned to the Company and assumes reinsurance premiums from mandatory pooling arrangements.

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