China Life Insurance Company Limited (NYSE: LFC) and Fidelity and Guaranty Life (NYSE:FGL) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, earnings, analyst recommendations, dividends, profitability, risk and valuation.

Insider and Institutional Ownership

0.2% of China Life Insurance Company Limited shares are owned by institutional investors. Comparatively, 23.6% of Fidelity and Guaranty Life shares are owned by institutional investors. 0.6% of Fidelity and Guaranty Life shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings and price targets for China Life Insurance Company Limited and Fidelity and Guaranty Life, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
China Life Insurance Company Limited 0 3 3 0 2.50
Fidelity and Guaranty Life 0 1 0 0 2.00

Fidelity and Guaranty Life has a consensus target price of $26.80, indicating a potential downside of 14.24%. Given Fidelity and Guaranty Life’s higher possible upside, analysts clearly believe Fidelity and Guaranty Life is more favorable than China Life Insurance Company Limited.

Dividends

China Life Insurance Company Limited pays an annual dividend of $0.14 per share and has a dividend yield of 0.8%. Fidelity and Guaranty Life pays an annual dividend of $0.26 per share and has a dividend yield of 0.8%. China Life Insurance Company Limited pays out 26.4% of its earnings in the form of a dividend. Fidelity and Guaranty Life pays out 6.8% 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. China Life Insurance Company Limited has increased its dividend for 3 consecutive years. Fidelity and Guaranty Life is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares China Life Insurance Company Limited and Fidelity and Guaranty Life’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
China Life Insurance Company Limited 5.21% 10.32% 1.16%
Fidelity and Guaranty Life 14.57% 8.83% 0.63%

Risk and Volatility

China Life Insurance Company Limited has a beta of 1.4, suggesting that its stock price is 40% more volatile than the S&P 500. Comparatively, Fidelity and Guaranty Life has a beta of 0.88, suggesting that its stock price is 12% less volatile than the S&P 500.

Valuation & Earnings

This table compares China Life Insurance Company Limited and Fidelity and Guaranty Life’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
China Life Insurance Company Limited $81.43 billion 1.23 $2.88 billion $0.53 33.42
Fidelity and Guaranty Life $1.53 billion 1.21 $223.00 million $3.83 8.16

China Life Insurance Company Limited has higher revenue and earnings than Fidelity and Guaranty Life. Fidelity and Guaranty Life is trading at a lower price-to-earnings ratio than China Life Insurance Company Limited, indicating that it is currently the more affordable of the two stocks.

Summary

China Life Insurance Company Limited beats Fidelity and Guaranty Life on 10 of the 17 factors compared between the two stocks.

China Life Insurance Company Limited Company Profile

China Life Insurance Company Limited is a life insurance company. The Company provides a range of insurance products, including individual and group life insurance, health insurance and accident insurance products. It operates through three segments: Life Insurance, Health Insurance, and Accident Insurance. Its Life Insurance segment provides participating and non-participating life insurance and annuities to individuals and groups. Its Health Insurance segment provides short-term and long-term health insurance to individuals and groups. Its Accident Insurance segment provides short-term and long-term accident insurance to individuals and groups.

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.

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