American International Group (NYSE: AIG) and Marsh & McLennan Companies (NYSE:MMC) are both large-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, risk, profitability, institutional ownership, earnings, dividends and analyst recommendations.
This is a breakdown of recent ratings and recommmendations for American International Group and Marsh & McLennan Companies, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|American International Group||2||5||9||0||2.44|
|Marsh & McLennan Companies||0||4||6||0||2.60|
American International Group currently has a consensus target price of $68.12, indicating a potential upside of 9.77%. Marsh & McLennan Companies has a consensus target price of $84.60, indicating a potential upside of 1.74%. Given American International Group’s higher possible upside, research analysts plainly believe American International Group is more favorable than Marsh & McLennan Companies.
This table compares American International Group and Marsh & McLennan Companies’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|American International Group||-5.07%||3.43%||0.51%|
|Marsh & McLennan Companies||13.86%||28.88%||10.26%|
Valuation & Earnings
This table compares American International Group and Marsh & McLennan Companies’ gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|American International Group||$52.37 billion||1.07||-$849.00 million||($2.51)||-24.73|
|Marsh & McLennan Companies||$13.21 billion||3.21||$1.77 billion||$3.65||22.78|
Marsh & McLennan Companies has higher revenue, but lower earnings than American International Group. American International Group is trading at a lower price-to-earnings ratio than Marsh & McLennan Companies, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
American International Group has a beta of 1.23, indicating that its share price is 23% more volatile than the S&P 500. Comparatively, Marsh & McLennan Companies has a beta of 1.01, indicating that its share price is 1% more volatile than the S&P 500.
American International Group pays an annual dividend of $1.28 per share and has a dividend yield of 2.1%. Marsh & McLennan Companies pays an annual dividend of $1.50 per share and has a dividend yield of 1.8%. American International Group pays out -51.0% of its earnings in the form of a dividend. Marsh & McLennan Companies pays out 41.1% 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. American International Group has raised its dividend for 3 consecutive years and Marsh & McLennan Companies has raised its dividend for 7 consecutive years. American International Group is clearly the better dividend stock, given its higher yield and lower payout ratio.
Insider and Institutional Ownership
83.5% of American International Group shares are held by institutional investors. Comparatively, 85.1% of Marsh & McLennan Companies shares are held by institutional investors. 0.5% of American International Group shares are held by company insiders. Comparatively, 1.5% of Marsh & McLennan Companies shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
Marsh & McLennan Companies beats American International Group on 10 of the 17 factors compared between the two stocks.
American International Group Company Profile
American International Group, Inc. is a global insurance company. The Company provides a range of property casualty insurance, life insurance, retirement products and other financial services to commercial and individual customers. Its segments include Commercial Insurance, Consumer Insurance, Other Operations and Legacy Portfolio. The Commercial Insurance segment is a provider of insurance products and services for commercial customers. It includes property casualty networks. The Consumer Insurance segment is a franchise that brings together a portfolio of retirement, life insurance and personal insurance products offered through multiple distribution networks. The Other Operations segment consists of businesses and items not attributed to its Commercial and Consumer modules or its Legacy Portfolio. The Legacy Portfolio segment includes Legacy Property and Casualty Run-Off Insurance Lines, as well as Legacy Life Insurance Run-Off Lines and Legacy Investments.
Marsh & McLennan Companies Company Profile
Marsh & McLennan Companies, Inc. is a professional services firm offering clients advice and solutions in risk, strategy and people. The Company is the parent company of various risk advisors and specialty consultants, including Marsh, the insurance broker; Guy Carpenter, the risk and reinsurance specialist; Mercer, the provider of human resource and investment related financial advice and services, and Oliver Wyman Group, the management and economic consultancy. It conducts business through two segments: Risk and Insurance Services, which includes risk management activities, as well as insurance and reinsurance broking and services, and Consulting includes health, retirement, talent and investments consulting services and products, and specialized management, economic and brand consulting services. It conducts business in the Risk and Insurance Services segment through Marsh and Guy Carpenter. It conducts business in the Consulting segment through Mercer and Oliver Wyman Group.
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