XL Group (NYSE:XL) and AmTrust Financial Services (NASDAQ:AFSI) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their earnings, institutional ownership, valuation, risk, dividends, profitability and analyst recommendations.
Institutional & Insider Ownership
78.5% of XL Group shares are held by institutional investors. Comparatively, 37.0% of AmTrust Financial Services shares are held by institutional investors. 3.0% of XL Group shares are held by company insiders. Comparatively, 50.8% of AmTrust Financial Services 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.
XL Group pays an annual dividend of $0.88 per share and has a dividend yield of 1.5%. AmTrust Financial Services pays an annual dividend of $0.34 per share and has a dividend yield of 2.4%. XL Group has increased its dividend for 5 consecutive years and AmTrust Financial Services has increased its dividend for 11 consecutive years. AmTrust Financial Services is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Earnings & Valuation
This table compares XL Group and AmTrust Financial Services’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|AmTrust Financial Services||$5.96 billion||0.47||-$348.88 million||N/A||N/A|
XL Group has higher earnings, but lower revenue than AmTrust Financial Services.
This table compares XL Group and AmTrust Financial Services’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|AmTrust Financial Services||2.56%||-14.82%||-1.58%|
This is a summary of recent ratings and recommmendations for XL Group and AmTrust Financial Services, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|AmTrust Financial Services||0||4||0||0||2.00|
XL Group currently has a consensus target price of $49.92, indicating a potential downside of 13.32%. AmTrust Financial Services has a consensus target price of $15.13, indicating a potential upside of 6.07%. Given AmTrust Financial Services’ higher probable upside, analysts clearly believe AmTrust Financial Services is more favorable than XL Group.
AmTrust Financial Services beats XL Group on 6 of the 11 factors compared between the two stocks.
About XL Group
XL Group Ltd, through its subsidiaries, operates as an insurance and reinsurance company worldwide. The company's Insurance segment offers primary and excess casualty, environmental liability, professional liability, property, excess and surplus lines, U.S. program/facilities, and construction business products. It also provides property and casualty products; insurance coverages for program administrators and managing general agents; mergers and acquisitions, and structured risk solutions; construction-related products and risk engineering services; and advanced loss of profits/delay in start-up, annual facilities for employers and contractors, commercial project builders, construction/contractors all risks, engineering/erection all risks, machinery breakdown, and other products. In addition, this segment offers aviation and satellite, marine, fine art and specie, private client, equine, livestock and aquaculture, energy, crisis management, political risk, credit and bond, London wholesale property and casualty, life, accident, and health products. The Reinsurance segment provides casualty reinsurance products, including general and professional liability, and automobile liability and workers' compensation; property reinsurance products comprising property catastrophe, risk excess of loss, and proportional products; specialty reinsurance products, such as energy, marine, aviation, and space; and other reinsurance products that include fidelity, surety, trade credit, accident and health, mortgage, and political risk. It also writes whole account capital gearing quota share contracts on select syndicates at Lloyd's. The company markets its products and services to the industrial, commercial, and professional firms; insurance companies; and other enterprises through international, national, and regional producers, acting as the brokers and representatives of policyholders. XL Group Ltd was founded in 1986 and is headquartered in Hamilton, Bermuda.
About AmTrust Financial Services
AmTrust Financial Services, Inc. provides property and casualty insurance in the United States and internationally. The company operates in three segments: Small Commercial Business, Specialty Risk and Extended Warranty, and Specialty Program. The Small Commercial Business segment offers workers' compensation insurance products; and commercial package, and other property and casualty insurance products, such as commercial property, general liability, inland marine, employment practices liability, commercial automobile, and umbrella coverage to small businesses. The Specialty Risk and Extended Warranty segment provides custom designed coverages, such as accidental damage plans, mechanical breakdown protection, and payment protection plans in connection with the sale of consumer and commercial goods; and coverage for niche property, casualty, and specialty liability risks comprising general liability, employers' liability, and professional and medical liability. The Specialty Program segment offers workers' compensation, general liability, commercial auto liability, property coverage, excess and surplus lines programs, and other specialty commercial property and casualty insurance products to small and middle market companies. The company also provides reinsurance services primarily for personal and commercial automotive business. It distributes its policies third-party brokers, agents, retailers, or administrators. AmTrust Financial Services, Inc. was founded in 1998 and is based in New York, New York.
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