Analyzing W.R. Berkley (NYSE:WRB) and AON (NYSE:AON)

W.R. Berkley (NYSE:WRB) and AON (NYSE:AON) are both large-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their dividends, earnings, profitability, institutional ownership, risk, valuation and analyst recommendations.

Valuation & Earnings

This table compares W.R. Berkley and AON”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
W.R. Berkley	$14.71 billion	1.74	$1.78 billion	$4.87	14.15
AON	$17.18 billion	3.41	$3.69 billion	$18.14	15.22

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

Dividends

W.R. Berkley pays an annual dividend of $0.40 per share and has a dividend yield of 0.6%. AON pays an annual dividend of $3.28 per share and has a dividend yield of 1.2%. W.R. Berkley pays out 8.2% of its earnings in the form of a dividend. AON pays out 18.1% 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. W.R. Berkley has raised its dividend for 23 consecutive years.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for W.R. Berkley and AON, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
W.R. Berkley	6	9	3	0	1.83
AON	1	6	12	0	2.58

W.R. Berkley presently has a consensus target price of $70.83, indicating a potential upside of 2.80%. AON has a consensus target price of $394.53, indicating a potential upside of 42.85%. Given AON’s stronger consensus rating and higher probable upside, analysts clearly believe AON is more favorable than W.R. Berkley.

Profitability

This table compares W.R. Berkley and AON’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
W.R. Berkley	12.94%	19.44%	4.28%
AON	22.27%	42.13%	7.57%

Insider & Institutional Ownership

68.8% of W.R. Berkley shares are held by institutional investors. Comparatively, 86.1% of AON shares are held by institutional investors. 25.1% of W.R. Berkley shares are held by insiders. Comparatively, 1.0% of AON shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Risk & Volatility

W.R. Berkley has a beta of 0.27, meaning that its stock price is 73% less volatile than the S&P 500. Comparatively, AON has a beta of 0.7, meaning that its stock price is 30% less volatile than the S&P 500.

Summary

AON beats W.R. Berkley on 14 of the 17 factors compared between the two stocks.

About W.R. Berkley

W. R. Berkley Corporation, an insurance holding company, operates as a commercial lines writers worldwide. It operates in two segments, Insurance and Reinsurance & Monoline Excess. The Insurance segment underwrites commercial insurance business, including excess and surplus lines, admitted lines, and specialty personal lines. This segment also provides accident and health insurance and reinsurance products; insurance for commercial risks; casualty and specialty environmental products; specialized insurance coverages for fine arts and jewelry exposures; excess liability and inland marine coverage for small to medium-sized insureds; and commercial general liability, umbrella, professional liability, directors and officers, commercial property, and surety products, as well as products for technology, and life sciences and travel industries. In addition, this segment offers cyber risk solutions; crime and fidelity insurance products; medical professional coverages; workers' compensation insurance products; general insurance; personal lines insurance solutions, including home, condo/co-op, auto, and collectibles; automobile, law enforcement, public officials and educator's legal, and employment practices liability, as well as incidental medical and property and crime insurance products; at-risk and alternative risk insurance program management services; professional liability; energy and marine risks; and provides insurance products to the Lloyd's marketplace. The Reinsurance & Monoline Excess segment provides treaty and facultative reinsurance solutions; property and casualty reinsurance; facultative reinsurance products include automatic, semi-automatic and individual risk assumed reinsurance; and turnkey products such as cyber, employment practices liability insurance, liquor liability insurance and violent events. The company was founded in 1967 and is headquartered in Greenwich, Connecticut.

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.