Head-To-Head Survey: Marsh & McLennan Companies (MMC) & American International Group (AIG)
Marsh & McLennan Companies (NYSE: MMC) and American International Group (NYSE:AIG) are both large-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, earnings, analyst recommendations, valuation, dividends, risk and profitability.
This table compares Marsh & McLennan Companies and American International Group’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Marsh & McLennan Companies||13.97%||28.56%||10.18%|
|American International Group||-0.53%||6.06%||0.95%|
Marsh & McLennan Companies pays an annual dividend of $1.50 per share and has a dividend yield of 1.8%. American International Group pays an annual dividend of $1.28 per share and has a dividend yield of 2.0%. Marsh & McLennan Companies pays out 41.4% of its earnings in the form of a dividend. American International Group pays out -711.1% 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 raised its dividend for 3 consecutive years and American International Group has raised its dividend for 7 consecutive years. American International Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This is a summary of recent ratings and recommmendations for Marsh & McLennan Companies and American International Group, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Marsh & McLennan Companies||0||4||8||0||2.67|
|American International Group||2||3||10||0||2.53|
Marsh & McLennan Companies presently has a consensus target price of $82.60, indicating a potential downside of 2.18%. American International Group has a consensus target price of $68.12, indicating a potential upside of 5.01%. Given American International Group’s higher possible upside, analysts plainly believe American International Group is more favorable than Marsh & McLennan Companies.
Valuation and Earnings
This table compares Marsh & McLennan Companies and American International Group’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Marsh & McLennan Companies||$13.50 billion||3.21||$3.23 billion||$3.62||23.33|
|American International Group||$49.87 billion||1.18||$4.99 billion||($0.18)||-360.37|
American International Group has higher revenue and earnings than Marsh & McLennan Companies. American International Group 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.
Risk and Volatility
Marsh & McLennan Companies has a beta of 1.01, indicating that its share price is 1% more volatile than the S&P 500. Comparatively, American International Group has a beta of 1.16, indicating that its share price is 16% more volatile than the S&P 500.
Insider & Institutional Ownership
84.7% of Marsh & McLennan Companies shares are owned by institutional investors. Comparatively, 84.0% of American International Group shares are owned by institutional investors. 1.5% of Marsh & McLennan Companies shares are owned by company insiders. Comparatively, 0.5% of American International Group shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Marsh & McLennan Companies beats American International Group on 9 of the 17 factors compared between the two stocks.
Marsh & McLennan Companies Company Profile
Marsh & McLennan Companies, Inc. is a professional services firm offering clients advice and solutions in risk, strategy and people. The Company is the parent company of various risk advisors and specialty consultants, including Marsh, the insurance broker; Guy Carpenter, the risk and reinsurance specialist; Mercer, the provider of human resource and investment related financial advice and services, and Oliver Wyman Group, the management and economic consultancy. It conducts business through two segments: Risk and Insurance Services, which includes risk management activities, as well as insurance and reinsurance broking and services, and Consulting includes health, retirement, talent and investments consulting services and products, and specialized management, economic and brand consulting services. It conducts business in the Risk and Insurance Services segment through Marsh and Guy Carpenter. It conducts business in the Consulting segment through Mercer and Oliver Wyman Group.
American International Group Company Profile
American International Group, Inc. is a global insurance company. The Company provides a range of property casualty insurance, life insurance, retirement products and other financial services to commercial and individual customers. Its segments include Commercial Insurance, Consumer Insurance, Other Operations and Legacy Portfolio. The Commercial Insurance segment is a provider of insurance products and services for commercial customers. It includes property casualty networks. The Consumer Insurance segment is a franchise that brings together a portfolio of retirement, life insurance and personal insurance products offered through multiple distribution networks. The Other Operations segment consists of businesses and items not attributed to its Commercial and Consumer modules or its Legacy Portfolio. The Legacy Portfolio segment includes Legacy Property and Casualty Run-Off Insurance Lines, as well as Legacy Life Insurance Run-Off Lines and Legacy Investments.
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