Analyzing United Fire Group (NASDAQ:UFCS) and First Acceptance (OTCMKTS:FACO)

First Acceptance (OTCMKTS:FACO) and United Fire Group (NASDAQ:UFCS) are both small-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, profitability, earnings, dividends and valuation.

Analyst Ratings

This is a breakdown of recent ratings and price targets for First Acceptance and United Fire Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Acceptance	0	0	0	0	0.00
United Fire Group	0	1	0	0	2.00

United Fire Group has a consensus target price of $26.00, indicating a potential downside of 5.35%. Given United Fire Group’s stronger consensus rating and higher possible upside, analysts clearly believe United Fire Group is more favorable than First Acceptance.

Volatility and Risk

First Acceptance has a beta of 0.21, indicating that its stock price is 79% less volatile than the S&P 500. Comparatively, United Fire Group has a beta of 0.37, indicating that its stock price is 63% less volatile than the S&P 500.

Valuation & Earnings

This table compares First Acceptance and United Fire Group”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Acceptance	$560.58 million	0.22	$73.91 million	$2.09	1.56
United Fire Group	$1.10 billion	0.64	-$29.70 million	$1.94	14.16

First Acceptance has higher earnings, but lower revenue than United Fire Group. First Acceptance is trading at a lower price-to-earnings ratio than United Fire Group, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

0.1% of First Acceptance shares are owned by institutional investors. Comparatively, 62.7% of United Fire Group shares are owned by institutional investors. 9.5% of First Acceptance shares are owned by insiders. Comparatively, 6.0% of United Fire Group shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares First Acceptance and United Fire Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Acceptance	12.41%	53.03%	13.17%
United Fire Group	4.15%	6.75%	1.51%

Summary

United Fire Group beats First Acceptance on 7 of the 13 factors compared between the two stocks.

About First Acceptance

First Acceptance Corporation, together with its subsidiaries, operates as a retailer, servicer, and underwriter of non-standard personal automobile insurance and related products in the United States. It issues non-standard automobile insurance policies to individuals based on their inability or unwillingness to obtain insurance coverage from standard carriers due to various factors, including their payment preference, failure to maintain continuous insurance coverage, or driving record. The company also underwrites auto and motorcycle insurance products; and renters, homeowners, commercial, pet, life, travel, outdoor vehicle, and hospital indemnity insurance products. In addition, it provides TeleMed, a subscription service that offers access to doctor for consulting, diagnosing, and prescribing medication for non-emergency illness. The company primarily distributes its products through its retail locations, as well as through call center and internet. As of December 31, 2021, it leased and operated 338 retail locations, and a call center. First Acceptance Corporation was founded in 1969 and is headquartered in Nashville, Tennessee.

About United Fire Group

United Fire Group, Inc., together with its subsidiaries, provides property and casualty insurance for individuals and businesses in the United States. The company offers commercial and personal lines of property and casualty insurance; and reinsurance coverage for property and casualty insurance. Its commercial lines include fire and allied lines, other liability, automobile, workers’ compensation, fidelity and surety coverage, and other insurance products; and personal lines comprise automobile, and fire and allied lines coverage, including homeowners, as well as provides assumed reinsurance products. The company sells its products through a network of independent agencies. United Fire Group, Inc. was incorporated in 1946 and is headquartered in Cedar Rapids, Iowa.