Fidelity and Guaranty Life (NYSE: FGL) and American Equity Investment Life Holding (NYSE:AEL) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, earnings, institutional ownership, analyst recommendations, risk, valuation and profitability.

Profitability

This table compares Fidelity and Guaranty Life and American Equity Investment Life Holding’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Fidelity and Guaranty Life 13.61% 8.00% 0.55%
American Equity Investment Life Holding 6.48% 6.84% 0.30%

Dividends

Fidelity and Guaranty Life pays an annual dividend of $0.26 per share and has a dividend yield of 0.8%. American Equity Investment Life Holding pays an annual dividend of $0.24 per share and has a dividend yield of 0.9%. Fidelity and Guaranty Life pays out 7.9% of its earnings in the form of a dividend. American Equity Investment Life Holding pays out 11.1% 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. Fidelity and Guaranty Life has raised its dividend for 4 consecutive years.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Fidelity and Guaranty Life and American Equity Investment Life Holding, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Fidelity and Guaranty Life 0 2 0 0 2.00
American Equity Investment Life Holding 0 5 2 0 2.29

Fidelity and Guaranty Life currently has a consensus price target of $26.40, indicating a potential downside of 15.52%. American Equity Investment Life Holding has a consensus price target of $24.43, indicating a potential downside of 12.00%. Given American Equity Investment Life Holding’s stronger consensus rating and higher possible upside, analysts clearly believe American Equity Investment Life Holding is more favorable than Fidelity and Guaranty Life.

Institutional and Insider Ownership

23.5% of Fidelity and Guaranty Life shares are held by institutional investors. Comparatively, 93.4% of American Equity Investment Life Holding shares are held by institutional investors. 0.6% of Fidelity and Guaranty Life shares are held by company insiders. Comparatively, 4.1% of American Equity Investment Life Holding shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Risk & Volatility

Fidelity and Guaranty Life has a beta of 0.9, indicating that its share price is 10% less volatile than the S&P 500. Comparatively, American Equity Investment Life Holding has a beta of 2.49, indicating that its share price is 149% more volatile than the S&P 500.

Valuation and Earnings

This table compares Fidelity and Guaranty Life and American Equity Investment Life Holding’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Fidelity and Guaranty Life $1.41 billion 1.29 $550.00 million $3.29 9.50
American Equity Investment Life Holding $3.00 billion 0.82 $343.94 million $2.16 12.85

Fidelity and Guaranty Life has higher revenue, but lower earnings than American Equity Investment Life Holding. Fidelity and Guaranty Life is trading at a lower price-to-earnings ratio than American Equity Investment Life Holding, indicating that it is currently the more affordable of the two stocks.

Summary

American Equity Investment Life Holding beats Fidelity and Guaranty Life on 9 of the 17 factors compared between the two stocks.

Fidelity and Guaranty Life Company Profile

Fidelity & Guaranty Life (FGL) is a holding company focused on obtaining controlling equity stakes in companies that operate across various industries. FGL’s primary business is the sale of individual life insurance products and annuities through independent agents, managing general agents, and specialty brokerage firms and in selected institutional markets. FGL’s principal products are deferred annuities (including fixed indexed annuity (FIA) contracts), immediate annuities and life insurance products. FGL markets products through its insurance subsidiaries, Fidelity & Guaranty Life Insurance Company (FGL Insurance) and Fidelity & Guaranty Life Insurance Company of New York (FGL NY Insurance). It distributes and services primarily fixed rate annuities, including FIAs. The Company provides FIA’s for pre-retirement wealth accumulation and post-retirement income management. Its life insurance provides wealth protection and transfer opportunities through indexed universal life products.

American Equity Investment Life Holding Company Profile

American Equity Investment Life Holding Company is engaged in the development and sale of fixed index and fixed rate annuity products. The Company issues fixed annuity and life insurance products through its life insurance subsidiaries, American Equity Investment Life Insurance Company, American Equity Investment Life Insurance Company of New York and Eagle Life Insurance Company. Its target market includes the group of individuals aged 45 to 75 seeking to accumulate tax-deferred savings or create guaranteed lifetime income. The Company distributes through a range of distribution channels, including independent agents, broker/dealers, banks and registered investment advisors. Its product types include fixed index annuities, annual reset fixed rate annuities, multi-year fixed rate annuities and single premium immediate annuities. Its life insurance products include traditional ordinary and term, universal life and other interest-sensitive life insurance products.

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