Financial Review: HCI Group (NYSE:HCI) & First Acceptance (OTCMKTS:FACO)

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

Valuation and Earnings

This table compares First Acceptance and HCI 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	0.18	$73.91 million	$1.92	1.35
HCI Group	$550.67 million	2.10	$79.03 million	$7.56	15.35

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
First Acceptance	13.19%	83.33%	15.85%
HCI Group	14.35%	36.40%	4.64%

Insider and Institutional Ownership

0.1% of First Acceptance shares are owned by institutional investors. Comparatively, 87.0% of HCI Group shares are owned by institutional investors. 9.5% of First Acceptance shares are owned by company insiders. Comparatively, 25.3% of HCI Group shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Volatility & Risk

First Acceptance has a beta of 0.12, suggesting that its stock price is 88% less volatile than the S&P 500. Comparatively, HCI Group has a beta of 1.12, suggesting that its stock price is 12% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for First Acceptance and HCI Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Acceptance	0	0	0	0	N/A
HCI Group	0	0	4	0	3.00

HCI Group has a consensus price target of $125.33, suggesting a potential upside of 7.97%. Given HCI Group’s higher possible upside, analysts plainly believe HCI Group is more favorable than First Acceptance.

Summary

HCI Group beats First Acceptance on 10 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 HCI Group

HCI Group, Inc., together with its subsidiaries, engages in the property and casualty insurance, insurance management, reinsurance, real estate, and information technology businesses in Florida. It provides residential insurance products, such as homeowners, fire, flood, and wind-only insurance to homeowners, condominium owners, and tenants for properties, as well as offers reinsurance programs. The company also owns and operates waterfront properties and retail shopping centers, and an office building, as well as commercial properties for investment purposes. In addition, it designs and develops web-based applications and products for mobile devices, including SAMS, an online policy administration platform; Harmony, a policy administration platform; ClaimColony, an end-to-end claims management platform; and AtlasViewer, a mapping and data visualization platform. The company was formerly known as Homeowners Choice, Inc. and changed its name to HCI Group, Inc. in May 2013. HCI Group, Inc. was incorporated in 2006 and is headquartered in Tampa, Florida.