Contrasting White Mountains Insurance Group (WTM) and American Financial Group (AFG)

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White Mountains Insurance Group (NYSE:WTM) and American Financial Group (NYSE:AFG) are both mid-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, valuation, dividends, risk, profitability, analyst recommendations and institutional ownership.

Analyst Ratings

This is a summary of recent recommendations and price targets for White Mountains Insurance Group and American Financial Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
White Mountains Insurance Group 0 0 0 0 N/A
American Financial Group 0 2 0 0 2.00

American Financial Group has a consensus price target of $107.00, indicating a potential upside of 12.17%. Given American Financial Group’s higher possible upside, analysts clearly believe American Financial Group is more favorable than White Mountains Insurance Group.

Profitability

This table compares White Mountains Insurance Group and American Financial Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
White Mountains Insurance Group -38.26% 0.15% 0.13%
American Financial Group 7.41% 14.92% 1.22%

Dividends

White Mountains Insurance Group pays an annual dividend of $1.00 per share and has a dividend yield of 0.1%. American Financial Group pays an annual dividend of $1.60 per share and has a dividend yield of 1.7%. White Mountains Insurance Group pays out -9.5% of its earnings in the form of a dividend. American Financial Group pays out 19.0% 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. American Financial Group has increased its dividend for 13 consecutive years. American Financial Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

White Mountains Insurance Group has a beta of 0.47, meaning that its stock price is 53% less volatile than the S&P 500. Comparatively, American Financial Group has a beta of 0.89, meaning that its stock price is 11% less volatile than the S&P 500.

Insider & Institutional Ownership

87.0% of White Mountains Insurance Group shares are owned by institutional investors. Comparatively, 63.3% of American Financial Group shares are owned by institutional investors. 4.0% of White Mountains Insurance Group shares are owned by company insiders. Comparatively, 13.7% of American Financial Group shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares White Mountains Insurance Group and American Financial Group’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
White Mountains Insurance Group $369.10 million 7.87 -$141.20 million ($10.49) -87.48
American Financial Group $7.15 billion 1.19 $530.00 million $8.40 11.36

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

Summary

American Financial Group beats White Mountains Insurance Group on 12 of the 15 factors compared between the two stocks.

About White Mountains Insurance Group

White Mountains Insurance Group, Ltd., through its subsidiaries, provides insurances services in the United States. The company operates through four segments: HG Global/BAM, NSM, MediaAlpha and Other Operations. The HG Global/BAM segment provides insurance on municipal bonds issued to finance public purposes, such as schools, utilities, and transportation facilities, as well as reinsurance protection services. The NSM segment operates as a general underwriting agency and property administrator for specialty property and casualty insurance to sectors, such as specialty transportation, social services, and real estate. The MediaAlpha segment operates MediaAlpha, a marketing technology that enables programmatic buying and selling of vertical specific, performance-based media between advertisers, and publishers through cost-per-click, cost-per-call, and cost-per-lead pricing models. The Other Operations segment provides capital solutions to asset managers and registered investment advisors for general ownership transfers, management buyouts, acquisitions, growth finances, and legacy partner liquidity; facilitates claim payouts; Buzz, an online price comparison and booking platform for all the moving related services in the United Kingdom; and Wobi, a consumer-facing technology platform that enables price comparison. White Mountains Insurance Group, Ltd. is headquartered in Hamilton, Bermuda.

About American Financial Group

American Financial Group, Inc., an insurance holding company, provides property and casualty insurance products in the United States. The company operates through three segments: Property and Casualty Insurance, Annuity, and Other. It offers property and transportation insurance products, such as physical damage and liability coverage for buses, trucks and recreational vehicles, inland and ocean marine, agricultural-related products, and other property; specialty casualty insurance, including primarily excess and surplus, general liability, executive liability, professional 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 leasing and financing institutions, surety and fidelity products, and trade credit insurance. The company sells its property and casualty insurance products through independent insurance agents and brokers, as well as through employee agents. It also provides traditional fixed, fixed-indexed, and variable-indexed annuities to the retail, financial institutions, registered investment advisor, and education markets; and engages in the commercial real estate operations in Cincinnati, Whitefield, New Hampshire, Chesapeake Bay, Charleston, and Palm Beach. American Financial Group, Inc. was founded in 1872 and is headquartered in Cincinnati, Ohio.

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