Argo Group International Holdings (NASDAQ: AGII) and American Financial Group (NYSE:AFG) are both finance companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, risk, dividends, analyst recommendations, institutional ownership, profitability and earnings.

Institutional & Insider Ownership

86.3% of Argo Group International Holdings shares are held by institutional investors. Comparatively, 62.5% of American Financial Group shares are held by institutional investors. 4.9% of Argo Group International Holdings shares are held by company insiders. Comparatively, 13.7% of American Financial Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Argo Group International Holdings and American Financial Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Argo Group International Holdings 1 1 0 0 1.50
American Financial Group 0 2 1 0 2.33

Argo Group International Holdings presently has a consensus price target of $70.00, indicating a potential upside of 11.20%. American Financial Group has a consensus price target of $93.00, indicating a potential downside of 11.84%. Given Argo Group International Holdings’ higher possible upside, equities research analysts plainly believe Argo Group International Holdings is more favorable than American Financial Group.

Earnings & Valuation

This table compares Argo Group International Holdings and American Financial Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Argo Group International Holdings $1.69 billion 1.12 $244.20 million $5.54 11.36
American Financial Group $6.49 billion 1.43 $1.16 billion $8.89 11.87

American Financial Group has higher revenue and earnings than Argo Group International Holdings. Argo Group International Holdings 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.

Volatility and Risk

Argo Group International Holdings has a beta of 0.8, suggesting that its stock price is 20% less volatile than the S&P 500. Comparatively, American Financial Group has a beta of 0.84, suggesting that its stock price is 16% less volatile than the S&P 500.

Profitability

This table compares Argo Group International Holdings and American Financial Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Argo Group International Holdings 10.04% 6.39% 1.52%
American Financial Group 11.89% 11.66% 1.07%

Dividends

Argo Group International Holdings pays an annual dividend of $1.08 per share and has a dividend yield of 1.7%. American Financial Group pays an annual dividend of $1.40 per share and has a dividend yield of 1.3%. Argo Group International Holdings pays out 19.5% of its earnings in the form of a dividend. American Financial Group pays out 15.7% 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 raised its dividend for 11 consecutive years.

Summary

American Financial Group beats Argo Group International Holdings on 13 of the 17 factors compared between the two stocks.

About Argo Group International Holdings

Argo Group International Holdings, Ltd. is an underwriter of specialty insurance and reinsurance products in the property and casualty market. The Company operates through four segments: Excess and Surplus Lines, Commercial Specialty, International Specialty and Syndicate 1200. Excess and Surplus Lines segment carriers focus on risks that the standard (admitted) market is unwilling or unable to underwrite. The Excess and Surplus Lines segment consists of two operating platforms: Colony Specialty and Argo Pro. Commercial Specialty segment provides property, casualty and surety coverages designed to meet the insurance needs of businesses within certain markets. International Specialty segment underwrites insurance and reinsurance risks. It operate as Argo Re, the Casualty and Professional Lines unit of Argo Insurance in Bermuda, and Argo Seguros Brazil, S.A. in Brazil. The Syndicate 1200 segment underwrites around the world property, specialty and non-United States liability insurance.

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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