Financial Analysis: American Financial Group (NYSE:AFG) and Crawford & Company (NYSE:CRD.B)

American Financial Group (NYSE:AFG) and Crawford & Company (NYSE:CRD.B) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their analyst recommendations, profitability, earnings, dividends, valuation, risk and institutional ownership.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for American Financial Group and Crawford & Company, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
American Financial Group	0	3	2	0	2.40
Crawford & Company	0	0	0	1	4.00

American Financial Group presently has a consensus target price of $156.00, suggesting a potential upside of 6.48%. Given American Financial Group’s higher probable upside, research analysts clearly believe American Financial Group is more favorable than Crawford & Company.

Dividends

American Financial Group pays an annual dividend of $3.52 per share and has a dividend yield of 2.4%. Crawford & Company pays an annual dividend of $0.32 per share and has a dividend yield of 2.5%. American Financial Group pays out 30.8% of its earnings in the form of a dividend. Crawford & Company pays out 66.7% 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 increased its dividend for 19 consecutive years.

Profitability

This table compares American Financial Group and Crawford & Company’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
American Financial Group	11.51%	20.35%	2.94%
Crawford & Company	1.81%	28.15%	6.51%

Volatility and Risk

American Financial Group has a beta of 0.62, suggesting that its stock price is 38% less volatile than the S&P 500. Comparatively, Crawford & Company has a beta of 0.6, suggesting that its stock price is 40% less volatile than the S&P 500.

Earnings and Valuation

This table compares American Financial Group and Crawford & Company”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
American Financial Group	$8.17 billion	1.49	$842.00 million	$11.44	12.81
Crawford & Company	$1.31 billion	0.47	$19.63 million	$0.48	26.38

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

Insider and Institutional Ownership

64.4% of American Financial Group shares are owned by institutional investors. Comparatively, 11.0% of Crawford & Company shares are owned by institutional investors. 16.9% of American Financial Group shares are owned by company insiders. Comparatively, 51.0% of Crawford & Company shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Summary

American Financial Group beats Crawford & Company on 11 of the 18 factors compared between the two stocks.

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.

About Crawford & Company

Crawford & Co. engages in the provision of claims management and outsourcing solutions to carriers, brokers, and corporates. It operates through the following segments: Crawford Loss Adjusting, Crawford TPA Solutions, and Crawford Platform Solutions. The Crawford Loss Adjusting segment consists of adjusting services provided to insurance companies and self-insured entities related to property and casualty losses caused by physical damage to commercial and residential real property and certain types of personal property. The Crawford TPA Solutions segment provides third party administration for workers’ compensation, auto and liability, disability absence management, medical management, and accident and health to corporations, brokers, and insurers worldwide. The Crawford Platform Solutions segment is involved in the management of contractor networks and the provision of claims management services to insurance companies and self-insured entities related to property, casualty, and catastrophic losses. The company was founded by Jim Crawford in 1941 and is headquartered in Peachtree Corners, GA.