Willis Towers Watson Public (NASDAQ:WLTW) and Marsh & McLennan Companies (NYSE:MMC) are both large-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, valuation, dividends, institutional ownership, earnings, risk and analyst recommendations.
Dividends
Willis Towers Watson Public pays an annual dividend of $2.84 per share and has a dividend yield of 1.3%. Marsh & McLennan Companies pays an annual dividend of $1.86 per share and has a dividend yield of 1.6%. Willis Towers Watson Public pays out 25.9% of its earnings in the form of a dividend. Marsh & McLennan Companies pays out 39.9% 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. Willis Towers Watson Public has increased its dividend for 4 consecutive years and Marsh & McLennan Companies has increased its dividend for 11 consecutive years. Marsh & McLennan Companies is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Valuation and Earnings
This table compares Willis Towers Watson Public and Marsh & McLennan Companies' top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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Willis Towers Watson Public | $9.04 billion | 3.23 | $1.04 billion | $10.96 | 20.69 |
Marsh & McLennan Companies | $16.65 billion | 3.58 | $1.74 billion | $4.66 | 25.21 |
Marsh & McLennan Companies has higher revenue and earnings than Willis Towers Watson Public. Willis Towers Watson Public is trading at a lower price-to-earnings ratio than Marsh & McLennan Companies, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Willis Towers Watson Public and Marsh & McLennan Companies' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
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Willis Towers Watson Public | 11.00% | 14.32% | 4.02% |
Marsh & McLennan Companies | 11.91% | 31.20% | 7.96% |
Insider & Institutional Ownership
90.3% of Willis Towers Watson Public shares are owned by institutional investors. Comparatively, 86.6% of Marsh & McLennan Companies shares are owned by institutional investors. 0.6% of Willis Towers Watson Public shares are owned by company insiders. Comparatively, 0.9% of Marsh & McLennan Companies shares are owned 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.
Analyst Ratings
This is a summary of current recommendations and price targets for Willis Towers Watson Public and Marsh & McLennan Companies, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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Willis Towers Watson Public | 0 | 7 | 3 | 1 | 2.45 |
Marsh & McLennan Companies | 2 | 7 | 7 | 0 | 2.31 |
Willis Towers Watson Public presently has a consensus target price of $217.5833, suggesting a potential downside of 4.03%. Marsh & McLennan Companies has a consensus target price of $117.7059, suggesting a potential upside of 0.21%. Given Marsh & McLennan Companies' higher probable upside, analysts plainly believe Marsh & McLennan Companies is more favorable than Willis Towers Watson Public.
Risk and Volatility
Willis Towers Watson Public has a beta of 0.71, suggesting that its stock price is 29% less volatile than the S&P 500. Comparatively, Marsh & McLennan Companies has a beta of 0.86, suggesting that its stock price is 14% less volatile than the S&P 500.
Summary
Marsh & McLennan Companies beats Willis Towers Watson Public on 13 of the 18 factors compared between the two stocks.