Financial Comparison: AON (NYSE:AON) versus Axis Capital (NYSE:AXS)

Axis Capital (NYSE:AXS) and AON (NYSE:AON) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, earnings, valuation, profitability, dividends, institutional ownership and analyst recommendations.

Profitability

This table compares Axis Capital and AON’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Axis Capital	14.62%	16.61%	2.71%
AON	22.24%	40.46%	7.20%

Analyst Recommendations

This is a summary of recent ratings and price targets for Axis Capital and AON, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Axis Capital	0	5	9	0	2.64
AON	3	6	13	0	2.45

Axis Capital currently has a consensus target price of $120.00, suggesting a potential upside of 11.25%. AON has a consensus target price of $369.12, suggesting a potential upside of 7.17%. Given Axis Capital’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Axis Capital is more favorable than AON.

Earnings and Valuation

This table compares Axis Capital and AON”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Axis Capital	$6.56 billion	1.18	$1.01 billion	$13.09	8.24
AON	$17.18 billion	4.25	$3.69 billion	$18.26	18.86

AON has higher revenue and earnings than Axis Capital. Axis Capital is trading at a lower price-to-earnings ratio than AON, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Axis Capital has a beta of 0.39, suggesting that its share price is 61% less volatile than the S&P 500. Comparatively, AON has a beta of 0.63, suggesting that its share price is 37% less volatile than the S&P 500.

Institutional & Insider Ownership

93.4% of Axis Capital shares are held by institutional investors. Comparatively, 86.1% of AON shares are held by institutional investors. 0.6% of Axis Capital shares are held by insiders. Comparatively, 1.0% of AON shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

Axis Capital pays an annual dividend of $1.76 per share and has a dividend yield of 1.6%. AON pays an annual dividend of $3.28 per share and has a dividend yield of 1.0%. Axis Capital pays out 13.4% of its earnings in the form of a dividend. AON pays out 18.0% 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. Axis Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

AON beats Axis Capital on 11 of the 16 factors compared between the two stocks.

About Axis Capital

AXIS Capital Holdings Limited, through its subsidiaries, provides various specialty insurance and reinsurance products in Bermuda, the United States, and internationally. It operates through two segments, Insurance and Reinsurance. The Insurance segment offers professional insurance products that cover directors' and officers' liability, errors and omissions, employment practices, fiduciary, crime, professional indemnity, medical malpractice, and other financial insurance related coverages for commercial enterprises, financial institutions, not-for-profit organizations, and other professional service providers; and property insurance products for commercial buildings, residential premises, construction projects, property in transit, onshore renewable energy installations, and physical damage and business interruption following an act of terrorism. This segment also provides marine and aviation insurance services for offshore energy, renewable offshore energy, cargo, liability, including kidnap and ransom, fine art, specie, and hull war, hull and liability, and specific war coverage for passenger airlines, cargo operations, general aviation operations, airports, aviation authorities, security firms, and product manufacturers; personal accident, travel insurance, specialty health products for employer and affinity groups, and pet insurance products; and liability, cyber, and credit and political risk insurance services. The Reinsurance segment offers agriculture, marine and aviation, catastrophe, accidental and health, credit and surety, motor, professional, travel, life, engineering, property, and liability reinsurance products. AXIS Capital Holdings Limited was founded in 2001 and is headquartered in Pembroke, Bermuda.

About AON

Aon Plc engages in the provision of risk, health, and wealth solutions. It focuses on risk capital including claim management, reinsurance, risk analysis, management, retention, and transfer; and human capital involving analytics, health and benefits, investments, pensions and retirement, talent and rewards, and workplace wellbeing. The company was founded in 1982 and is headquartered in Dublin, Ireland.