Arthur J. Gallagher & Co. (NYSE: AJG) and Kingstone Companies (NASDAQ:KINS) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, profitability, dividends, valuation, risk, earnings and institutional ownership.

Volatility & Risk

Arthur J. Gallagher & Co. has a beta of 1.19, indicating that its share price is 19% more volatile than the S&P 500. Comparatively, Kingstone Companies has a beta of 0.68, indicating that its share price is 32% less volatile than the S&P 500.

Dividends

Arthur J. Gallagher & Co. pays an annual dividend of $1.56 per share and has a dividend yield of 2.7%. Kingstone Companies pays an annual dividend of $0.32 per share and has a dividend yield of 2.1%. Arthur J. Gallagher & Co. pays out 62.9% of its earnings in the form of a dividend. Kingstone Companies pays out 29.9% 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. Kingstone Companies has increased its dividend for 6 consecutive years.

Valuation and Earnings

This table compares Arthur J. Gallagher & Co. and Kingstone Companies’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Arthur J. Gallagher & Co. $5.78 billion 1.82 $887.80 million $2.48 23.54
Kingstone Companies $82.45 million 1.96 $15.52 million $1.07 14.21

Arthur J. Gallagher & Co. has higher revenue and earnings than Kingstone Companies. Kingstone Companies is trading at a lower price-to-earnings ratio than Arthur J. Gallagher & Co., indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Arthur J. Gallagher & Co. and Kingstone Companies’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Arthur J. Gallagher & Co. 7.62% 13.68% 4.37%
Kingstone Companies 11.52% 12.81% 4.97%

Insider & Institutional Ownership

81.5% of Arthur J. Gallagher & Co. shares are owned by institutional investors. Comparatively, 47.7% of Kingstone Companies shares are owned by institutional investors. 1.6% of Arthur J. Gallagher & Co. shares are owned by insiders. Comparatively, 10.3% of Kingstone Companies shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Arthur J. Gallagher & Co. and Kingstone Companies, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Arthur J. Gallagher & Co. 1 3 5 0 2.44
Kingstone Companies 0 0 1 0 3.00

Arthur J. Gallagher & Co. currently has a consensus target price of $59.33, suggesting a potential upside of 1.63%. Kingstone Companies has a consensus target price of $16.00, suggesting a potential upside of 5.26%. Given Kingstone Companies’ stronger consensus rating and higher possible upside, analysts plainly believe Kingstone Companies is more favorable than Arthur J. Gallagher & Co..

Summary

Arthur J. Gallagher & Co. beats Kingstone Companies on 9 of the 17 factors compared between the two stocks.

Arthur J. Gallagher & Co. Company Profile

Arthur J. Gallagher & Co. and its subsidiaries are engaged in providing insurance brokerage and consulting services, and third-party claims settlement and administration services to both domestic and international entities. The Company operates through three segments: brokerage, risk management and corporate. The brokerage segment primarily consists of retail and wholesale insurance brokerage operations. Its retail brokerage operations negotiate and place property/casualty, employer-provided health and welfare insurance, and healthcare exchange and retirement solutions principally for middle-market commercial, industrial, public entity, religious and not-for-profit entities. The risk management segment provides contract claim settlement and administration services for enterprises that choose to self-insure some or all of their property/casualty coverages and for insurance companies that choose to outsource some or all of their property/casualty claims departments.

Kingstone Companies Company Profile

Kingstone Companies, Inc. offers property and casualty insurance products to small businesses and individuals in New York State. The Company offers these products through its subsidiary, Kingstone Insurance Company (KICO). KICO is a licensed property and casualty insurance company. The Company operates through property and casualty insurances segment, which offers a range of property and casualty policies to its producers. The Company underwrites its business utilizing the CLUE industry claims database, insurance scoring reports, physical inspection of risks and other individual risk underwriting tools. It writes homeowners and dwelling fire business in New York City and Long Island. The Company’s product lines include personal lines, commercial liability, commercial automobile, livery physical damage and other. Its personal lines consist of homeowners, dwelling fire, renters, equipment breakdown and service line endorsements and personal umbrella policies.

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