Comparing Tokio Marine (OTCMKTS:TKOMY) & First American Financial (NYSE:FAF)

Tokio Marine (OTCMKTS:TKOMY) and First American Financial (NYSE:FAF) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, earnings, institutional ownership, valuation, profitability and risk.

Valuation and Earnings

This table compares Tokio Marine and First American Financial”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tokio Marine	$55.42 billion	1.52	$6.96 billion	$3.64	11.99
First American Financial	$6.13 billion	1.11	$131.10 million	$1.81	36.87

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

Risk and Volatility

Tokio Marine has a beta of 0.27, meaning that its stock price is 73% less volatile than the S&P 500. Comparatively, First American Financial has a beta of 1.27, meaning that its stock price is 27% more volatile than the S&P 500.

Dividends

Tokio Marine pays an annual dividend of $1.10 per share and has a dividend yield of 2.5%. First American Financial pays an annual dividend of $2.16 per share and has a dividend yield of 3.2%. Tokio Marine pays out 30.2% of its earnings in the form of a dividend. First American Financial pays out 119.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. First American Financial has raised its dividend for 15 consecutive years. First American Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Tokio Marine and First American Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Tokio Marine	13.45%	22.49%	3.69%
First American Financial	2.90%	10.41%	3.33%

Analyst Recommendations

This is a breakdown of current recommendations for Tokio Marine and First American Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tokio Marine	1	1	0	0	1.50
First American Financial	0	1	3	0	2.75

First American Financial has a consensus price target of $75.00, suggesting a potential upside of 12.39%. Given First American Financial’s stronger consensus rating and higher possible upside, analysts clearly believe First American Financial is more favorable than Tokio Marine.

Insider & Institutional Ownership

89.1% of First American Financial shares are held by institutional investors. 3.7% of First American 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.

Summary

First American Financial beats Tokio Marine on 9 of the 17 factors compared between the two stocks.

About Tokio Marine

Tokio Marine Holdings, Inc., together with its subsidiaries, engages in non-life and life insurance, international insurance, and financial and general businesses worldwide. The company provides business, fire, Internet and mobile, rental housing, and natural catastrophe risk insurance services, as well as insurance for retail and corporate fields. It also provides property investment, insurance agency and risk consulting, human resource, in-home care and nursing care information, healthcare/medical, call center, and real estate-related services. Tokio Marine Holdings, Inc. serves individuals, small to medium sized non-profit organizations, schools, or churches. The company was formerly known as Millea Holdings, Inc. and changed its name to Tokio Marine Holdings, Inc. in 2008. Tokio Marine Holdings, Inc. was founded in 1879 and is headquartered in Tokyo, Japan.

About First American Financial

First American Financial Corporation, through its subsidiaries, provides financial services. It operates through Title Insurance and Services, and Home Warranty segments. The Title Insurance and Services segment issues title insurance policies on residential and commercial property, as well as offers related products and services internationally. This segment also provides closing and/or escrow services; products, services, and solutions to mitigate risk or otherwise facilitate real estate transactions; and appraisals and other valuation-related products and services, lien release and document custodial services, warehouse lending services, default-related products and services, document generation services, mortgage loans subservicing, and related products and services, as well as banking, trust, and wealth management services. In addition, it accommodates tax-deferred exchanges of real estate; and maintains, manages, and provides access to title plant data and records. This segment offers its products through a network of direct operations and agents in various states and in the District of Columbia, as well as in Canada, the United Kingdom, Australia, New Zealand, South Korea, and internationally. The Home Warranty segment provides home warranty products, including residential service contracts that cover residential systems, such as heating and air conditioning systems, and various appliances against failures that occur as the result of normal usage during the coverage period. This segment operates in various states and the District of Columbia. The company was founded in 1889 and is headquartered in Santa Ana, California.