Prudential Financial (NYSE: PRU) and Aegon (NYSE:AEG) are both large-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their dividends, institutional ownership, earnings, profitability, analyst recommendations, risk and valuation.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Prudential Financial and Aegon, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Prudential Financial 0 6 7 0 2.54
Aegon 0 2 0 0 2.00

Prudential Financial presently has a consensus price target of $116.55, suggesting a potential upside of 0.70%. Aegon has a consensus price target of $4.60, suggesting a potential downside of 25.57%. Given Prudential Financial’s stronger consensus rating and higher possible upside, analysts clearly believe Prudential Financial is more favorable than Aegon.

Dividends

Prudential Financial pays an annual dividend of $3.00 per share and has a dividend yield of 2.6%. Aegon pays an annual dividend of $0.25 per share and has a dividend yield of 4.0%. Prudential Financial pays out 30.2% of its earnings in the form of a dividend. Aegon pays out 25.3% 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. Prudential Financial has raised its dividend for 8 consecutive years. Aegon is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

64.7% of Prudential Financial shares are held by institutional investors. Comparatively, 10.2% of Aegon shares are held by institutional investors. 0.7% of Prudential Financial shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Prudential Financial and Aegon’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Prudential Financial $51.57 billion 0.95 $4.37 billion $9.94 11.64
Aegon $37.25 billion 0.34 $483.58 million $0.99 6.24

Prudential Financial has higher revenue and earnings than Aegon. Aegon is trading at a lower price-to-earnings ratio than Prudential Financial, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Prudential Financial and Aegon’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Prudential Financial 7.71% 9.51% 0.57%
Aegon 5.64% 6.60% 0.39%

Volatility and Risk

Prudential Financial has a beta of 1.55, suggesting that its share price is 55% more volatile than the S&P 500. Comparatively, Aegon has a beta of 1.44, suggesting that its share price is 44% more volatile than the S&P 500.

Summary

Prudential Financial beats Aegon on 15 of the 17 factors compared between the two stocks.

About Prudential Financial

Prudential Financial, Inc., is a financial services company. The Company, through its subsidiaries, offers a range of financial products and services, which includes life insurance, annuities, retirement-related services, mutual funds and investment management. The Company’s operations consists of four divisions, which together encompass seven segments. The U.S. Retirement Solutions and Investment Management division consists of Individual Annuities, Retirement and Asset Management segments. The U.S. Individual Life and Group Insurance division consists of Individual Life and Group Insurance segments. The International Insurance division consists of International Insurance segment. The Closed Block division consists of Closed Block segment. The Company has operations in the United States, Asia, Europe and Latin America.

About Aegon

Aegon N.V. (Aegon) is an international life insurance, pensions and asset management company. The Company’s segments include the Americas, which includes the United States, Mexico and Brazil; the Netherlands; the United Kingdom; Central & Eastern Europe; Spain & Portugal; Asia, and Aegon Asset Management. It offers protection against mortality, morbidity and longevity risks, including traditional and universal life. It offers products with mortality, morbidity, and longevity risks, including traditional and universal life; mortgages; annuity products, and banking products. It offers individual protection products, such as annuities, term insurance, income protection and international/offshore bonds. It has activities in the Czech Republic, Hungary, Poland, Romania, Slovakia and Turkey. It offers life insurance marketed to high-net-worth individuals in Hong Kong and Singapore. It also offers investment products covering third-party customers, insurance-linked solutions.

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