Financial Review: Marsh & McLennan Companies (NYSE:MRSH) and Intact Financial (OTCMKTS:IFCZF)

Intact Financial (OTCMKTS:IFCZF) and Marsh & McLennan Companies (NYSE:MRSH) are both large-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, analyst recommendations, earnings, valuation, institutional ownership, dividends and profitability.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Intact Financial and Marsh & McLennan Companies, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Intact Financial	0	2	5	0	2.71
Marsh & McLennan Companies	2	12	6	2	2.36

Marsh & McLennan Companies has a consensus target price of $203.60, indicating a potential upside of 7.93%. Given Marsh & McLennan Companies’ higher possible upside, analysts clearly believe Marsh & McLennan Companies is more favorable than Intact Financial.

Valuation and Earnings

This table compares Intact Financial and Marsh & McLennan Companies”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Intact Financial	$20.46 billion	1.53	$2.41 billion	$13.01	13.73
Marsh & McLennan Companies	$26.98 billion	3.34	$4.16 billion	$8.18	23.06

Marsh & McLennan Companies has higher revenue and earnings than Intact Financial. Intact Financial 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.

Profitability

This table compares Intact Financial and Marsh & McLennan Companies’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Intact Financial	11.45%	16.77%	5.06%
Marsh & McLennan Companies	14.20%	33.32%	8.51%

Institutional and Insider Ownership

88.0% of Marsh & McLennan Companies shares are owned by institutional investors. 0.4% of Marsh & McLennan Companies shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Intact Financial pays an annual dividend of $4.24 per share and has a dividend yield of 2.4%. Marsh & McLennan Companies pays an annual dividend of $3.96 per share and has a dividend yield of 2.1%. Intact Financial pays out 32.6% of its earnings in the form of a dividend. Marsh & McLennan Companies pays out 48.4% 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. Marsh & McLennan Companies has increased its dividend for 15 consecutive years. Intact Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Marsh & McLennan Companies beats Intact Financial on 13 of the 17 factors compared between the two stocks.

About Intact Financial

Intact Financial Corporation, through its subsidiaries, provides property and casualty insurance products to individuals and businesses in Canada, the United States, the United Kingdom, and internationally. The company offers insurance, such as personal auto which provides coverage from accidents, third party liability, and physical damage; personal property which provides protection for homes and contents from risks, including fire, theft, vandalism, water damages, other damages, and personal liability; and commercial line and specialty line insurance which provides commercial auto, property, and liability coverages. It also provides pet and business insurance, as well as provides risk management solutions. The company serves its products to accident and health, technology, ocean and inland marine, builder's risk, and entertainment, as well as financial services and institutions; and various products to specialty property, surety, tuition reimbursement, management liability, and cyber and environmental institutions. It offers specialty insurance products including travel insurance, brokers, direct to consumer, agencies, wholesalers, affinity group, Intact Prestige, and managing general agent platform. The company was formerly known as ING Canada Inc. and changed its name to Intact Financial Corporation in 2009. Intact Financial Corporation was founded in 1809 and is based in Toronto, Canada.

About Marsh & McLennan Companies

Marsh & McLennan Cos., Inc. is a professional services firm, which engages in offering clients advice and solutions in risk, strategy, and people. It operates through the Risk and Insurance Services, and Consulting segments. The Risk and Insurance Services segment is involved in risk management activities, as well as insurance and reinsurance broking and services. The Consulting segment offers health, wealth, and career solutions and products, and specialized management, strategic, economic, and brand consulting services. The company was founded by Henry W. Marsh and Donald R. McLennan in 1871 and is headquartered in New York, NY.