Head to Head Contrast: Genworth Financial (NYSE:GNW) and American International Group (AIG)

Genworth Financial (NYSE: GNW) and American International Group (NYSE:AIG) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, risk, dividends, institutional ownership, analyst recommendations, profitability and earnings.

Dividends

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American International Group pays an annual dividend of $1.28 per share and has a dividend yield of 2.4%. Genworth Financial does not pay a dividend. American International Group pays out 53.3% of its earnings in the form of a dividend.

Volatility and Risk

Genworth Financial has a beta of 2.39, suggesting that its stock price is 139% more volatile than the S&P 500. Comparatively, American International Group has a beta of 1.25, suggesting that its stock price is 25% more volatile than the S&P 500.

Insider and Institutional Ownership

67.1% of Genworth Financial shares are held by institutional investors. Comparatively, 87.3% of American International Group shares are held by institutional investors. 0.3% of Genworth Financial shares are held by insiders. Comparatively, 0.5% of American International Group shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Genworth Financial and American International Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Genworth Financial $8.30 billion 0.17 $817.00 million $1.39 1.98
American International Group $49.52 billion 0.98 -$6.08 billion $2.40 22.33

Genworth Financial has higher earnings, but lower revenue than American International Group. Genworth Financial is trading at a lower price-to-earnings ratio than American International Group, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current ratings and recommmendations for Genworth Financial and American International Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Genworth Financial 0 3 1 0 2.25
American International Group 1 4 7 0 2.50

Genworth Financial presently has a consensus target price of $3.50, suggesting a potential upside of 27.27%. American International Group has a consensus target price of $66.10, suggesting a potential upside of 23.32%. Given Genworth Financial’s higher probable upside, equities research analysts plainly believe Genworth Financial is more favorable than American International Group.

Profitability

This table compares Genworth Financial and American International Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Genworth Financial 9.85% 4.63% 0.66%
American International Group -12.62% 3.10% 0.45%

Summary

American International Group beats Genworth Financial on 9 of the 16 factors compared between the two stocks.

Genworth Financial Company Profile

Genworth Financial, Inc. (Genworth) is a financial security company. The Company provides insurance, wealth management, investment and financial solutions. As of December 31, 2011, the Company had more than 15 million customers, with a presence in more than 25 countries. The Company operates in Insurance, Mortgage Insurance and Corporate and Runoff. The Mortgage Insurance Division includes the business segments, such as International Mortgage Insurance and U.S. Mortgage Insurance. The Corporate and Runoff Division includes the Runoff segment and Corporate and Other activities. In September 2013, Genworth Financial, Inc closed the sale of its Wealth Management business, including Genworth Financial Wealth Management and alternative solutions provider, the Altegris companies, to a partnership of Aquiline Capital Partners and Genstar Capital.

American International Group Company Profile

American International Group, Inc. is a global insurance company. The Company provides a range of property casualty insurance, life insurance, retirement products and other financial services to commercial and individual customers. Its segments include Commercial Insurance, Consumer Insurance, Other Operations and Legacy Portfolio. The Commercial Insurance segment is a provider of insurance products and services for commercial customers. It includes property casualty networks. The Consumer Insurance segment is a franchise that brings together a portfolio of retirement, life insurance and personal insurance products offered through multiple distribution networks. The Other Operations segment consists of businesses and items not attributed to its Commercial and Consumer modules or its Legacy Portfolio. The Legacy Portfolio segment includes Legacy Property and Casualty Run-Off Insurance Lines, as well as Legacy Life Insurance Run-Off Lines and Legacy Investments.

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