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

Institutional & Insider Ownership

93.3% of American Equity Investment Life Holding shares are owned by institutional investors. Comparatively, 0.8% of Aviva Plc shares are owned by institutional investors. 4.1% of American Equity Investment Life Holding shares are owned by company 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 American Equity Investment Life Holding and Aviva Plc, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
American Equity Investment Life Holding 0 5 2 0 2.29
Aviva Plc 0 1 1 0 2.50

American Equity Investment Life Holding currently has a consensus target price of $24.43, suggesting a potential downside of 11.55%. Given American Equity Investment Life Holding’s higher possible upside, research analysts clearly believe American Equity Investment Life Holding is more favorable than Aviva Plc.

Profitability

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

Net Margins Return on Equity Return on Assets
American Equity Investment Life Holding 6.48% 6.84% 0.30%
Aviva Plc N/A N/A N/A

Dividends

American Equity Investment Life Holding pays an annual dividend of $0.24 per share and has a dividend yield of 0.9%. Aviva Plc pays an annual dividend of $0.55 per share and has a dividend yield of 4.7%. American Equity Investment Life Holding pays out 11.1% of its earnings in the form of a dividend. American Equity Investment Life Holding has raised its dividend for 3 consecutive years and Aviva Plc has raised its dividend for 4 consecutive years. Aviva Plc is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
American Equity Investment Life Holding $3.00 billion 0.82 $343.94 million $2.16 12.79
Aviva Plc N/A N/A N/A N/A N/A

American Equity Investment Life Holding has higher revenue and earnings than Aviva Plc.

Volatility and Risk

American Equity Investment Life Holding has a beta of 2.5, suggesting that its stock price is 150% more volatile than the S&P 500. Comparatively, Aviva Plc has a beta of 1.2, suggesting that its stock price is 20% more volatile than the S&P 500.

Summary

American Equity Investment Life Holding beats Aviva Plc on 9 of the 13 factors compared between the two stocks.

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.

Aviva Plc Company Profile

Aviva plc is a holding company. The Company provides customers with long-term insurance and savings, general and health insurance, and fund management products and services. Its segments include United Kingdom & Ireland; France; Poland; Italy, Spain and Other; Canada; Asia; Aviva Investors, and Other Group activities. The United Kingdom and Ireland segment consists of two operating segments: Life and General Insurance. The principal activities of its French operations are long-term business and general insurance. Its Poland Activities in Poland consist of long-term business and general insurance operations. Its Italian operations are long-term business and general insurance. The principal activity of the Canadian operation is general insurance. Its activities in Asia consist of its long-term business operations in China, India, Singapore, Hong Kong, Vietnam, Indonesia, Taiwan and international operations. The Aviva Investors segment offers a range of asset management services.

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