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

Profitability

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

Net Margins Return on Equity Return on Assets
Markel Corporation 1.60% 0.83% 0.27%
American Financial Group 11.89% 11.66% 1.07%

Dividends

American Financial Group pays an annual dividend of $1.40 per share and has a dividend yield of 1.3%. Markel Corporation does not pay a dividend. American Financial Group pays out 15.7% of its earnings in the form of a dividend. Markel Corporation has increased its dividend for 11 consecutive years.

Volatility & Risk

Markel Corporation has a beta of 1.03, meaning that its share price is 3% more volatile than the S&P 500. Comparatively, American Financial Group has a beta of 0.84, meaning that its share price is 16% less volatile than the S&P 500.

Earnings and Valuation

This table compares Markel Corporation and American Financial Group’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Markel Corporation $5.75 billion 2.64 $948.88 million $4.50 243.13
American Financial Group $6.49 billion 1.43 $1.16 billion $8.89 11.82

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

Analyst Recommendations

This is a summary of current ratings and price targets for Markel Corporation and American Financial Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Markel Corporation 0 3 1 0 2.25
American Financial Group 0 2 1 0 2.33

Markel Corporation currently has a consensus price target of $1,066.67, suggesting a potential downside of 2.51%. American Financial Group has a consensus price target of $93.00, suggesting a potential downside of 11.49%. Given Markel Corporation’s higher probable upside, equities analysts clearly believe Markel Corporation is more favorable than American Financial Group.

Institutional and Insider Ownership

76.4% of Markel Corporation shares are owned by institutional investors. Comparatively, 62.5% of American Financial Group shares are owned by institutional investors. 2.5% of Markel Corporation shares are owned by company insiders. Comparatively, 13.7% of American Financial Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

American Financial Group beats Markel Corporation on 9 of the 16 factors compared between the two stocks.

About Markel Corporation

Markel Corporation is a financial holding company serving a range of markets. The Company’s principal business markets and underwrites specialty insurance products. It monitors and reports its ongoing underwriting operations in three segments: U.S. Insurance, International Insurance and Reinsurance. The Company, through its subsidiary Markel Ventures, Inc. (Markel Ventures), owns interests in various industrial and service businesses that operate outside of the specialty insurance marketplace. The U.S. Insurance segment includes all direct business and facultative placements written by its insurance subsidiaries domiciled in the United States. The International Insurance segment includes all direct business and facultative placements written by its insurance subsidiaries domiciled outside of the United States, including its syndicate at Lloyd’s of London (Lloyd’s). The Reinsurance segment includes all treaty reinsurance written across the Company.

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.

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