Head to Head Contrast: American Financial Group (NYSE:AFG) and W. R. Berkley (NYSE:WRB)

W. R. Berkley (NYSE:WRBGet Rating) and American Financial Group (NYSE:AFGGet Rating) are both large-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their risk, earnings, profitability, dividends, valuation, analyst recommendations and institutional ownership.

Insider & Institutional Ownership

49.9% of W. R. Berkley shares are held by institutional investors. Comparatively, 64.9% of American Financial Group shares are held by institutional investors. 22.3% of W. R. Berkley shares are held by insiders. Comparatively, 14.6% of American Financial Group shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Risk and Volatility

W. R. Berkley has a beta of 0.75, meaning that its share price is 25% less volatile than the S&P 500. Comparatively, American Financial Group has a beta of 0.91, meaning that its share price is 9% less volatile than the S&P 500.

Valuation and Earnings

This table compares W. R. Berkley and American Financial Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
W. R. Berkley $9.46 billion 1.91 $1.02 billion $4.96 13.76
American Financial Group $6.55 billion 1.76 $2.00 billion $21.84 6.19

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

Profitability

This table compares W. R. Berkley and American Financial Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
W. R. Berkley 13.55% 15.77% 3.35%
American Financial Group 28.14% 21.08% 3.75%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for W. R. Berkley and American Financial Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
W. R. Berkley 0 3 7 0 2.70
American Financial Group 0 0 1 0 3.00

W. R. Berkley presently has a consensus target price of $67.60, indicating a potential downside of 0.97%. American Financial Group has a consensus target price of $161.50, indicating a potential upside of 19.51%. Given American Financial Group’s stronger consensus rating and higher probable upside, analysts clearly believe American Financial Group is more favorable than W. R. Berkley.

Dividends

W. R. Berkley pays an annual dividend of $0.35 per share and has a dividend yield of 0.5%. American Financial Group pays an annual dividend of $2.24 per share and has a dividend yield of 1.7%. W. R. Berkley pays out 7.1% of its earnings in the form of a dividend. American Financial Group pays out 10.3% 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. W. R. Berkley has increased its dividend for 21 consecutive years and American Financial Group has increased its dividend for 17 consecutive years.

Summary

American Financial Group beats W. R. Berkley on 10 of the 17 factors compared between the two stocks.

W. R. Berkley Company Profile (Get Rating)

W. R. Berkley Corporation, an insurance holding company, operates as a commercial lines writer in the United States and internationally. It operates in two segments, Insurance and Reinsurance & Monoline Excess. The Insurance segment underwrites commercial insurance business, including premises operations, commercial automobile, property, products liability, and general and professional liability lines. It also provides workers' compensation insurance products; accident and health insurance and reinsurance products; insurance for commercial risks; specialty environmental products for contractors, consultants, and property owners and facilities operators; specialized insurance coverages for fine arts and jewelry exposures; umbrella and excess liability coverage products; and liquor liability and inland marine coverage for small to medium-sized insureds. In addition, this segment offers directors and officers, and surety risk products, as well as products for technology, and life sciences and travel industries; cyber risk solutions; casualty, group life, and crime and fidelity related insurance products; personal lines insurance solutions, including home, condo/co-op, auto, and collectibles; automobile, law enforcement, public officials and educator's legal, and employment practices liability, as well as incidental medical insurance products; and at-risk and alternative risk insurance program management services. The Reinsurance & Monoline Excess segment provides other insurance companies and self-insureds with assistance in managing their net risk through reinsurance on a portfolio basis through treaty reinsurance or on an individual basis through facultative reinsurance. W. R. Berkley Corporation was founded in 1967 and is based in Greenwich, Connecticut.

American Financial Group Company Profile (Get Rating)

American Financial Group, Inc., an insurance holding company, provides specialty property and casualty insurance products in the United States. It offers property and transportation insurance products, such as physical damage and liability coverage for buses and trucks, inland and ocean marine, agricultural-related products, and other commercial property and specialty transportation coverages; specialty casualty insurance, including primarily excess and surplus, executive and professional liability, general liability, umbrella and excess liability, and specialty coverage in targeted markets, as well as customized programs for small to mid-sized businesses and workers' compensation insurance; and specialty financial insurance products comprising risk management insurance programs for lending and leasing institutions, fidelity and surety products, and trade credit insurance. The company sells its property and casualty insurance products through independent insurance agents and brokers. American Financial Group, Inc. was founded in 1872 and is headquartered in Cincinnati, Ohio.

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