Fairfax Financial (OTCMKTS:FRFHF – Get Free Report) and Sun Life Financial (NYSE:SLF – Get Free Report) are both large-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, dividends, risk, institutional ownership, earnings and analyst recommendations.
Profitability
This table compares Fairfax Financial and Sun Life Financial’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Fairfax Financial | 13.83% | 14.72% | 4.16% |
| Sun Life Financial | 7.66% | 17.96% | 1.08% |
Analyst Ratings
This is a breakdown of current ratings and target prices for Fairfax Financial and Sun Life Financial, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Fairfax Financial | 0 | 3 | 3 | 0 | 2.50 |
| Sun Life Financial | 1 | 5 | 5 | 1 | 2.50 |
Insider and Institutional Ownership
10.4% of Fairfax Financial shares are owned by institutional investors. Comparatively, 52.3% of Sun Life Financial shares are owned by institutional investors. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
Risk and Volatility
Fairfax Financial has a beta of 0.48, indicating that its share price is 52% less volatile than the S&P 500. Comparatively, Sun Life Financial has a beta of 0.87, indicating that its share price is 13% less volatile than the S&P 500.
Earnings and Valuation
This table compares Fairfax Financial and Sun Life Financial”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Fairfax Financial | $31.59 billion | 1.06 | $4.77 billion | $204.10 | 7.91 |
| Sun Life Financial | $29.99 billion | 1.62 | $2.68 billion | $4.28 | 18.59 |
Fairfax Financial has higher revenue and earnings than Sun Life Financial. Fairfax Financial is trading at a lower price-to-earnings ratio than Sun Life Financial, indicating that it is currently the more affordable of the two stocks.
Dividends
Fairfax Financial pays an annual dividend of $15.00 per share and has a dividend yield of 0.9%. Sun Life Financial pays an annual dividend of $2.74 per share and has a dividend yield of 3.4%. Fairfax Financial pays out 7.3% of its earnings in the form of a dividend. Sun Life Financial pays out 64.0% 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. Sun Life Financial has increased its dividend for 11 consecutive years. Sun Life Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Summary
Sun Life Financial beats Fairfax Financial on 10 of the 16 factors compared between the two stocks.
About Fairfax Financial
Fairfax Financial Holdings Limited, through its subsidiaries, provides property and casualty insurance and reinsurance, and investment management services in the United States, Canada, Asia, and internationally. The company operates through Property and Casualty Insurance and Reinsurance, Life insurance and Run-off, and Non-Insurance Companies segments. It insures against losses to property from fire, explosion, earthquake, windstorm, flood, terrorism, boiler explosion, machinery breakdown, and construction defects, as well as underwrites automobile, commercial and personal property, and crop insurance. The company also offers workers' compensation, automobile, employer's liability, accident and health, medical malpractice, professional liability, and umbrella coverage insurance products; marine, aerospace, surety risk, and other risks and liabilities insurance products; and reinsurance products. In addition, it franchises, owns, and operates restaurants; retails sports lifestyle products; provides integrated travel and travel-related financial services, as well as advanced digital tools for agriculture; owns and operates holiday resorts; originates, processes, and distributes value-added pulses and staple foods; develops, manages, and invests in hospitality real estate. The company was formerly known as Markel Financial Holdings Limited and changed its name to Fairfax Financial Holdings Limited in 1987. Fairfax Financial Holdings Limited was incorporated in 1951 and is headquartered in Toronto, Canada.
About Sun Life Financial
Sun Life Financial Inc., a financial services company, provides savings, retirement, and pension products worldwide. The company operates in five segments: Asset Management, Canada, U.S., Asia, and Corporate. It offers various insurance products, such as term and permanent life; personal health, which includes prescription drugs, dental, and vision care; critical illness; long-term care; and disability, as well as reinsurance. The company also provides advice for financial planning and retirement planning services; investments products, such as mutual funds, segregated funds, and annuities; and asset and investment management products consisting of pooled funds, institutional portfolios, and pension funds. In addition, it offers real estate services; manages equity capital in various private and listed funds, as well as mezzanine debt, middle market direct lending, high-yield bonds, and syndicated loans; and operates as an investment grade fixed income investor, real estate investment management advisor, infrastructure investment manager, and alternative credit investment manager. The company was formerly known as Sun Life Financial Services of Canada Inc. and changed its name to Sun Life Financial Inc. in July 2003. Sun Life Financial Inc. was founded in 1871 and is headquartered in Toronto, Canada.
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