Marsh & McLennan Companies (NYSE:MRSH) vs. Assured Guaranty (NYSE:AGO) Financial Contrast

Assured Guaranty (NYSE:AGO) and Marsh & McLennan Companies (NYSE:MRSH) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, earnings, valuation, risk, profitability and dividends.

Profitability

This table compares Assured Guaranty and Marsh & McLennan Companies’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Assured Guaranty	37.34%	7.11%	3.25%
Marsh & McLennan Companies	14.20%	33.32%	8.51%

Valuation and Earnings

This table compares Assured Guaranty and Marsh & McLennan Companies”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Assured Guaranty	$1.11 billion	2.79	$503.00 million	$7.50	9.40
Marsh & McLennan Companies	$26.98 billion	3.53	$4.16 billion	$8.36	23.99

Marsh & McLennan Companies has higher revenue and earnings than Assured Guaranty. Assured Guaranty is trading at a lower price-to-earnings ratio than Marsh & McLennan Companies, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

92.2% of Assured Guaranty shares are held by institutional investors. Comparatively, 88.0% of Marsh & McLennan Companies shares are held by institutional investors. 5.7% of Assured Guaranty shares are held by company insiders. Comparatively, 0.4% of Marsh & McLennan Companies shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Assured Guaranty and Marsh & McLennan Companies, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Assured Guaranty	0	1	3	0	2.75
Marsh & McLennan Companies	2	11	6	2	2.38

Assured Guaranty presently has a consensus price target of $91.00, indicating a potential upside of 29.11%. Marsh & McLennan Companies has a consensus price target of $204.42, indicating a potential upside of 1.95%. Given Assured Guaranty’s stronger consensus rating and higher probable upside, equities analysts plainly believe Assured Guaranty is more favorable than Marsh & McLennan Companies.

Volatility and Risk

Assured Guaranty has a beta of 0.65, meaning that its share price is 35% less volatile than the S&P 500. Comparatively, Marsh & McLennan Companies has a beta of 0.53, meaning that its share price is 47% less volatile than the S&P 500.

Dividends

Assured Guaranty pays an annual dividend of $1.52 per share and has a dividend yield of 2.2%. Marsh & McLennan Companies pays an annual dividend of $3.96 per share and has a dividend yield of 2.0%. Assured Guaranty pays out 20.3% of its earnings in the form of a dividend. Marsh & McLennan Companies pays out 47.4% 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. Assured Guaranty has raised its dividend for 7 consecutive years and Marsh & McLennan Companies has raised its dividend for 15 consecutive years. Assured Guaranty is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Marsh & McLennan Companies beats Assured Guaranty on 10 of the 18 factors compared between the two stocks.

About Assured Guaranty

Assured Guaranty Ltd., together with its subsidiaries, provides credit protection products to public finance, infrastructure, and structured finance markets in the United States and internationally. It operates through two segments: Insurance and Asset Management. The company offers financial guaranty insurance that protects holders of debt instruments and other monetary obligations from defaults in scheduled payments. It insures and reinsures various debt obligations, including bonds issued by the United States state governmental authorities; and notes issued to finance infrastructure projects. In addition, the company insures and reinsures various the U.S. public finance obligations, such as general obligation, tax-backed, municipal utility, transportation, healthcare, higher education, infrastructure, housing revenue, investor-owned utility, renewable energy, and other public finance bonds. Further, the company involved in insuring and reinsuring of non-U.S. public finance obligations comprising regulated utilities, infrastructure finance, sovereign and sub-sovereign, renewable energy bonds, pooled infrastructure, and other public finance obligations; and the U.S. and non-U.S. Structured finance obligations, including residential mortgage-backed securities, life insurance transactions, consumer receivables securities, subscription finance facilities, pooled corporate obligations, and financial products. Additionally, it offers specialty business, such as real estate properties, insurance securitizations, and aircraft residual value insurance (RVI) transactions; and asset management services comprising investment advisory services. It markets its financial guaranty insurance directly to issuers and underwriters of public finance and structured finance securities, as well as to investors in such obligations. Assured Guaranty Ltd. was incorporated in 2003 and is headquartered in Hamilton, Bermuda.

About Marsh & McLennan Companies

Marsh & McLennan Cos., Inc. is a professional services firm, which engages in offering clients advice and solutions in risk, strategy, and people. It operates through the Risk and Insurance Services, and Consulting segments. The Risk and Insurance Services segment is involved in risk management activities, as well as insurance and reinsurance broking and services. The Consulting segment offers health, wealth, and career solutions and products, and specialized management, strategic, economic, and brand consulting services. The company was founded by Henry W. Marsh and Donald R. McLennan in 1871 and is headquartered in New York, NY.