American Financial Group (NYSE: AFG) and Endurance Specialty (NYSE:ENH) are both mid-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, dividends, profitability, valuation, institutional ownership, earnings and analyst recommendations.

Earnings and Valuation

This table compares American Financial Group and Endurance Specialty’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
American Financial Group $6.87 billion 1.39 $475.00 million $5.30 20.46
Endurance Specialty N/A N/A N/A $4.93 18.86

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

Institutional and Insider Ownership

61.3% of American Financial Group shares are held by institutional investors. Comparatively, 82.7% of Endurance Specialty shares are held by institutional investors. 14.9% of American Financial Group shares are held by company insiders. Comparatively, 5.8% of Endurance Specialty shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

This table compares American Financial Group and Endurance Specialty’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
American Financial Group 6.92% 11.10% 1.00%
Endurance Specialty 4.41% 1.29% 0.72%

Analyst Ratings

This is a summary of recent ratings and recommmendations for American Financial Group and Endurance Specialty, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
American Financial Group 0 1 2 0 2.67
Endurance Specialty 0 0 0 0 N/A

American Financial Group presently has a consensus price target of $114.67, indicating a potential upside of 5.74%. Given American Financial Group’s higher probable upside, equities analysts plainly believe American Financial Group is more favorable than Endurance Specialty.

Dividends

American Financial Group pays an annual dividend of $1.40 per share and has a dividend yield of 1.3%. Endurance Specialty pays an annual dividend of $1.52 per share and has a dividend yield of 1.6%. American Financial Group pays out 26.4% of its earnings in the form of a dividend. Endurance Specialty pays out 30.8% 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 Financial Group has increased its dividend for 7 consecutive years and Endurance Specialty has increased its dividend for 12 consecutive years. Endurance Specialty is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

American Financial Group beats Endurance Specialty on 10 of the 13 factors compared between the two stocks.

About American Financial Group

American Financial Group, Inc. (AFG) is a holding company engaged primarily in property and casualty insurance businesses. The Company, through Great American Insurance Group, focuses on commercial products for businesses, and is engaged in the sale of fixed and fixed-indexed annuities in the retail, financial institutions and education markets. It has four segments: Property and casualty insurance, Annuity, Run-off long-term care and life, and Other. It reports its property and casualty insurance business in specialty sub-segments, including Property and transportation, Specialty casualty and Specialty financial. AFG sells traditional fixed and fixed-indexed annuities in the retail, financial institutions and education markets through independent producers and through direct relationships with certain financial institutions. AFG also sells single premium annuities in financial institutions through direct relationships with certain banks and through independent agents and brokers.

About Endurance Specialty

Endurance Specialty Holdings Ltd. is a holding company. The Company, through its operating subsidiaries in Bermuda, the United States and the United Kingdom, focuses on underwriting specialty lines of personal and commercial property, and casualty insurance and reinsurance. It operates through two segments: Insurance and Reinsurance. In the Insurance segment, it writes agriculture, casualty and other specialty, professional lines, and property, marine/energy and aviation insurance. In the Reinsurance segment, it writes catastrophe, property, casualty, professional lines and specialty reinsurance. Its Insurance and Reinsurance segments both include property-related coverages, which provide insurance or reinsurance of an insurable interest in tangible property for property loss, damage or loss of use. In addition, its Insurance and Reinsurance segments include various casualty insurance and reinsurance coverages, which are concerned with the losses caused by injuries to third parties.

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