Critical Review: Cannae (NYSE:CNNE) vs. U.S. Global Investors (NASDAQ:GROW)

Cannae (NYSE:CNNE) and U.S. Global Investors (NASDAQ:GROW) are both small-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their earnings, profitability, analyst recommendations, valuation, dividends, risk and institutional ownership.

Earnings and Valuation

This table compares Cannae and U.S. Global Investors”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cannae	$452.50 million	2.36	-$304.60 million	($6.70)	-2.85
U.S. Global Investors	$8.45 million	3.96	-$330,000.00	($0.04)	-64.50

U.S. Global Investors has lower revenue, but higher earnings than Cannae. U.S. Global Investors is trading at a lower price-to-earnings ratio than Cannae, indicating that it is currently the more affordable of the two stocks.

Dividends

Cannae pays an annual dividend of $0.60 per share and has a dividend yield of 3.1%. U.S. Global Investors pays an annual dividend of $0.09 per share and has a dividend yield of 3.5%. Cannae pays out -9.0% of its earnings in the form of a dividend. U.S. Global Investors pays out -225.0% 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. U.S. Global Investors is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Cannae and U.S. Global Investors’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cannae	-94.12%	-18.19%	-14.58%
U.S. Global Investors	-3.95%	-0.71%	-0.67%

Volatility & Risk

Cannae has a beta of 1.08, indicating that its stock price is 8% more volatile than the S&P 500. Comparatively, U.S. Global Investors has a beta of 1.2, indicating that its stock price is 20% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings for Cannae and U.S. Global Investors, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cannae	1	0	2	0	2.33
U.S. Global Investors	0	0	0	0	0.00

Cannae presently has a consensus target price of $24.00, suggesting a potential upside of 25.72%. Given Cannae’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Cannae is more favorable than U.S. Global Investors.

Insider & Institutional Ownership

88.1% of Cannae shares are held by institutional investors. Comparatively, 23.6% of U.S. Global Investors shares are held by institutional investors. 10.9% of Cannae shares are held by insiders. Comparatively, 19.2% of U.S. Global Investors 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.

Summary

U.S. Global Investors beats Cannae on 10 of the 16 factors compared between the two stocks.

About Cannae

Cannae Holdings, Inc. is a principal investment firm. The firm primarily invests in restaurants, technology enabled healthcare services, financial services and more. It takes both minority and majority stakes. Cannae Holdings, Inc. was founded in 2014 and is based in Las Vegas, Nevada.

About U.S. Global Investors

U.S. Global Investors, Inc. is a publicly owned investment manager. It primarily provides its services to investment companies. The firm is a large advisory firm, an investment adviser to an investment company which provides portfolio management for investment companies. The firm manages and launches equity/balanced funds, fixed income funds and other funds. It also manages hedge funds. The firm primarily invests in no-load mutual funds and exchange traded funds (ETFs). U.S. Global Investors, Inc. is based in San Antonio, Texas.