Stewart Information Services (NYSE:STC) versus American Financial Group (NYSE:AFG) Financial Analysis

Stewart Information Services (NYSE:STC) and American Financial Group (NYSE:AFG) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, risk, earnings, institutional ownership, analyst recommendations, valuation and profitability.

Dividends

Stewart Information Services pays an annual dividend of $2.10 per share and has a dividend yield of 3.2%. American Financial Group pays an annual dividend of $3.52 per share and has a dividend yield of 2.7%. Stewart Information Services pays out 52.0% of its earnings in the form of a dividend. American Financial Group pays out 35.0% 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. Stewart Information Services has increased its dividend for 4 consecutive years and American Financial Group has increased its dividend for 19 consecutive years.

Insider and Institutional Ownership

96.9% of Stewart Information Services shares are owned by institutional investors. Comparatively, 64.4% of American Financial Group shares are owned by institutional investors. 1.5% of Stewart Information Services shares are owned by insiders. Comparatively, 17.4% of American Financial Group shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Stewart Information Services and American Financial Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Stewart Information Services	3.95%	9.32%	4.82%
American Financial Group	10.30%	18.64%	2.70%

Analyst Ratings

This is a breakdown of current ratings and price targets for Stewart Information Services and American Financial Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Stewart Information Services	0	0	4	0	3.00
American Financial Group	0	4	1	0	2.20

Stewart Information Services presently has a consensus target price of $81.33, indicating a potential upside of 25.79%. American Financial Group has a consensus target price of $141.25, indicating a potential upside of 10.25%. Given Stewart Information Services’ stronger consensus rating and higher probable upside, research analysts plainly believe Stewart Information Services is more favorable than American Financial Group.

Volatility & Risk

Stewart Information Services has a beta of 1.01, indicating that its stock price is 1% more volatile than the S&P 500. Comparatively, American Financial Group has a beta of 0.69, indicating that its stock price is 31% less volatile than the S&P 500.

Valuation & Earnings

This table compares Stewart Information Services and American Financial Group”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Stewart Information Services	$2.92 billion	0.62	$115.54 million	$4.04	16.00
American Financial Group	$8.17 billion	1.31	$842.00 million	$10.07	12.72

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

Summary

American Financial Group beats Stewart Information Services on 9 of the 17 factors compared between the two stocks.

About Stewart Information Services

Stewart Information Services Corporation, through its subsidiaries, provides title insurance and real estate transaction related services in the United States and internationally. The company involves in searching, examining, closing, and insuring the condition of the title to real property. It also offers home and personal insurance services; services for tax-deferred exchanges; and digital customer engagement platform services. It also provides appraisal management, online notarization and closing, credit and real estate information, and search and valuation services. The company serves homebuyers and sellers, residential and commercial real estate professionals, mortgage lenders and servicers, title agencies and real estate attorneys, and home builders through direct operations, network of independent agencies, and other businesses. The company was founded in 1893 and is headquartered in Houston, Texas.

About American Financial Group

American Financial Group, Inc., an insurance holding company, provides specialty property and casualty insurance products in the United States. The company 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. It sells its property and casualty insurance products through independent insurance agents and brokers. The company was founded in 1872 and is headquartered in Cincinnati, Ohio.