Arthur J. Gallagher & Co. (NYSE:AJG – Get Free Report) and Tiptree Financial (NASDAQ:TIPT – Get Free Report) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, profitability, earnings, analyst recommendations, valuation, institutional ownership and risk.
Risk & Volatility
Arthur J. Gallagher & Co. has a beta of 0.71, meaning that its share price is 29% less volatile than the S&P 500. Comparatively, Tiptree Financial has a beta of 1.14, meaning that its share price is 14% more volatile than the S&P 500.
Profitability
This table compares Arthur J. Gallagher & Co. and Tiptree Financial’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Arthur J. Gallagher & Co. | 14.39% | 14.83% | 3.80% |
| Tiptree Financial | 2.77% | 14.20% | 1.67% |
Analyst Recommendations
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Arthur J. Gallagher & Co. | 1 | 7 | 5 | 0 | 2.31 |
| Tiptree Financial | 0 | 0 | 0 | 0 | 0.00 |
Arthur J. Gallagher & Co. presently has a consensus price target of $324.83, suggesting a potential upside of 12.99%. Given Arthur J. Gallagher & Co.’s stronger consensus rating and higher probable upside, research analysts plainly believe Arthur J. Gallagher & Co. is more favorable than Tiptree Financial.
Valuation and Earnings
This table compares Arthur J. Gallagher & Co. and Tiptree Financial”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Arthur J. Gallagher & Co. | $11.40 billion | 6.46 | $1.46 billion | $6.91 | 41.60 |
| Tiptree Financial | $2.04 billion | 0.38 | $53.37 million | $1.20 | 17.32 |
Arthur J. Gallagher & Co. has higher revenue and earnings than Tiptree Financial. Tiptree Financial is trading at a lower price-to-earnings ratio than Arthur J. Gallagher & Co., indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
85.5% of Arthur J. Gallagher & Co. shares are held by institutional investors. Comparatively, 37.8% of Tiptree Financial shares are held by institutional investors. 1.6% of Arthur J. Gallagher & Co. shares are held by insiders. Comparatively, 31.8% of Tiptree Financial shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
Dividends
Arthur J. Gallagher & Co. pays an annual dividend of $2.60 per share and has a dividend yield of 0.9%. Tiptree Financial pays an annual dividend of $0.24 per share and has a dividend yield of 1.2%. Arthur J. Gallagher & Co. pays out 37.6% of its earnings in the form of a dividend. Tiptree Financial pays out 20.0% 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. Arthur J. Gallagher & Co. has increased its dividend for 15 consecutive years and Tiptree Financial has increased its dividend for 2 consecutive years. Tiptree Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.
Summary
Arthur J. Gallagher & Co. beats Tiptree Financial on 13 of the 17 factors compared between the two stocks.
About Arthur J. Gallagher & Co.
Arthur J. Gallagher & Co. engages in the provision of insurance brokerage, reinsurance brokerage, consulting, and third-party claims settlement and administration services. It operates through the following segments: Brokerage, Risk Management, and Corporate. The Brokerage segment consists of retail and wholesale insurance brokerage operations. The Risk Management segment provides contract claim settlement and administration services. The Corporate segment manages clean energy and other investments. The company was founded by Arthur J. Gallagher in 1927 and is headquartered in Rolling Meadows, IL.
About Tiptree Financial
Tiptree Inc., through its subsidiaries, provides specialty insurance products and related services primarily in the United States. It operates through two segments: Insurance and Mortgage. The company offers niche; commercial lines insurance products, including professional liability, general liability, contractual liability protection, property and other short-tail, and alternative risks insurance products; and personal lines insurance products, such as credit protection surrounding loan payments. It also provides auto and consumer warranty programs, including mobile devices, consumer electronics, appliances, furniture; and vehicle service contracts, GAP, and ancillary products; as well as premium or warranty contract financing services, lead generation support, and business process outsourcing services. In addition, the company offers mortgage loans for institutional investors; asset management services; and maritime shipping and asset management services, as well as invests in shares. It markets its products through a network of independent insurance agents, consumer finance companies, online retailers, auto dealers, and regional big box retailers. The company was formerly known as Tiptree Financial Inc. and changed its name to Tiptree Inc. in December 2016. Tiptree Inc. was founded in 1978 and is headquartered in Greenwich, Connecticut.
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