Analyzing EMC Insurance Group (EMCI) & American Financial Group (AFG)
EMC Insurance Group (NASDAQ: EMCI) and American Financial Group (NYSE:AFG) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, profitability, valuation, analyst recommendations, risk, institutional ownership and dividends.
Earnings & Valuation
This table compares EMC Insurance Group and American Financial Group’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|EMC Insurance Group||$649.90 million||0.91||$38.22 million||$1.79||15.53|
|American Financial Group||$6.49 billion||1.39||$1.16 billion||$8.89||11.51|
American Financial Group has higher revenue and earnings than EMC Insurance Group. American Financial Group is trading at a lower price-to-earnings ratio than EMC Insurance Group, indicating that it is currently the more affordable of the two stocks.
This table compares EMC Insurance Group and American Financial Group’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|EMC Insurance Group||5.87%||5.66%||1.98%|
|American Financial Group||11.89%||11.66%||1.07%|
EMC Insurance Group pays an annual dividend of $0.84 per share and has a dividend yield of 3.0%. American Financial Group pays an annual dividend of $1.25 per share and has a dividend yield of 1.2%. EMC Insurance Group pays out 46.9% of its earnings in the form of a dividend. American Financial Group pays out 14.1% 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. American Financial Group has increased its dividend for 11 consecutive years.
Institutional and Insider Ownership
28.2% of EMC Insurance Group shares are held by institutional investors. Comparatively, 62.7% of American Financial Group shares are held by institutional investors. 4.5% of EMC Insurance Group shares are held by company insiders. Comparatively, 13.7% of American Financial Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Risk and Volatility
EMC Insurance Group has a beta of 0.94, meaning that its share price is 6% less volatile than the S&P 500. Comparatively, American Financial Group has a beta of 0.84, meaning that its share price is 16% less volatile than the S&P 500.
This is a breakdown of recent ratings for EMC Insurance Group and American Financial Group, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|EMC Insurance Group||0||0||0||0||N/A|
|American Financial Group||0||1||1||0||2.50|
American Financial Group has a consensus price target of $83.00, suggesting a potential downside of 18.85%. Given American Financial Group’s higher possible upside, analysts plainly believe American Financial Group is more favorable than EMC Insurance Group.
American Financial Group beats EMC Insurance Group on 12 of the 16 factors compared between the two stocks.
About EMC Insurance Group
EMC Insurance Group Inc. is an insurance holding company. The Company operates through two segments: Property and Casualty Insurance and Reinsurance segment. It conducts its property and casualty insurance operations through its subsidiaries, including EMCASCO Insurance Company, Illinois EMCASCO Insurance Company and Dakota Fire Insurance Company, and its reinsurance operations through its subsidiary, EMC Reinsurance Company. The Company focuses on the sale of commercial lines of property and casualty insurance to small and medium-sized businesses. The Company offered its insurance products in 41 states, as of December 31, 2016. The Company is owned by Employers Mutual Casualty Company (Employers Mutual), a multiple-line property and casualty insurance company. The Company’s insurance agency, EMC Underwriters, LLC (EMC Underwriters), specializes in marketing excess and surplus lines of insurance.
About American Financial Group
American Financial Group, Inc. (AFG) is a holding company engaged primarily in property and casualty insurance businesses. The Company, through Great American Insurance Group, focuses on commercial products for businesses, and is engaged in the sale of fixed and fixed-indexed annuities in the retail, financial institutions and education markets. It has four segments: Property and casualty insurance, Annuity, Run-off long-term care and life, and Other. It reports its property and casualty insurance business in specialty sub-segments, including Property and transportation, Specialty casualty and Specialty financial. AFG sells traditional fixed and fixed-indexed annuities in the retail, financial institutions and education markets through independent producers and through direct relationships with certain financial institutions. AFG also sells single premium annuities in financial institutions through direct relationships with certain banks and through independent agents and brokers.
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