Head to Head Survey: Emergent Capital (EMGC) vs. American Equity Investment Life (AEL)

Emergent Capital (OTCMKTS: EMGC) and American Equity Investment Life (NYSE:AEL) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, valuation, dividends, profitability, institutional ownership, analyst recommendations and risk.

Risk & Volatility

Emergent Capital has a beta of 0.05, suggesting that its stock price is 95% less volatile than the S&P 500. Comparatively, American Equity Investment Life has a beta of 2.54, suggesting that its stock price is 154% more volatile than the S&P 500.

Institutional and Insider Ownership

93.1% of American Equity Investment Life shares are held by institutional investors. 33.3% of Emergent Capital shares are held by insiders. Comparatively, 4.1% of American Equity Investment Life shares are held by 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.

Valuation & Earnings

This table compares Emergent Capital and American Equity Investment Life’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Emergent Capital $1.12 million 55.68 -$49.68 million N/A N/A
American Equity Investment Life $2.22 billion 1.26 $83.24 million $2.88 10.86

American Equity Investment Life has higher revenue and earnings than Emergent Capital.

Profitability

This table compares Emergent Capital and American Equity Investment Life’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Emergent Capital -42.49% -12.80% -3.98%
American Equity Investment Life 7.90% 10.50% 0.46%

Dividends

American Equity Investment Life pays an annual dividend of $0.26 per share and has a dividend yield of 0.8%. Emergent Capital does not pay a dividend. American Equity Investment Life pays out 9.0% of its earnings in the form of a dividend. American Equity Investment Life has raised its dividend for 4 consecutive years.

Analyst Ratings

This is a summary of current recommendations and price targets for Emergent Capital and American Equity Investment Life, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Emergent Capital 0 0 1 0 3.00
American Equity Investment Life 0 6 1 0 2.14

American Equity Investment Life has a consensus target price of $27.71, suggesting a potential downside of 11.37%. Given American Equity Investment Life’s higher probable upside, analysts plainly believe American Equity Investment Life is more favorable than Emergent Capital.

Summary

American Equity Investment Life beats Emergent Capital on 10 of the 14 factors compared between the two stocks.

Emergent Capital Company Profile

Emergent Capital, Inc., formerly Imperial Holdings, Inc., is a specialty finance company that invests in asset classes, primarily life settlements. The Company, through its subsidiary companies, owns a portfolio of approximately 630 life insurance policies (life settlements). The Company purchases individual policies and portfolios of life insurance policies and manages those assets based on actuarial and market data. The Company provides customized liquidity solutions to owners of illiquid financial assets in two markets, which include life finance and structured settlements. The Company focuses on lending to outright purchases of portfolios, to tertiary trades, as well as individual secondary market purchases. The Company invests in short and long-term life settlement investments.

American Equity Investment Life Company Profile

American Equity Investment Life Holding Company is engaged in the development and sale of fixed index and fixed rate annuity products. The Company issues fixed annuity and life insurance products through its life insurance subsidiaries, American Equity Investment Life Insurance Company, American Equity Investment Life Insurance Company of New York and Eagle Life Insurance Company. Its target market includes the group of individuals aged 45 to 75 seeking to accumulate tax-deferred savings or create guaranteed lifetime income. The Company distributes through a range of distribution channels, including independent agents, broker/dealers, banks and registered investment advisors. Its product types include fixed index annuities, annual reset fixed rate annuities, multi-year fixed rate annuities and single premium immediate annuities. Its life insurance products include traditional ordinary and term, universal life and other interest-sensitive life insurance products.

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