American Equity Investment Life (NYSE:AEL) and Primerica (NYSE:PRI) are both mid-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, profitability, risk, institutional ownership, analyst recommendations, earnings and dividends.
Earnings and Valuation
This table compares American Equity Investment Life and Primerica's revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
---|
American Equity Investment Life | $3.46 billion | 0.75 | $246.09 million | $5.97 | 4.73 |
Primerica | $2.05 billion | 2.81 | $366.39 million | $8.43 | 17.40 |
Primerica has lower revenue, but higher earnings than American Equity Investment Life. American Equity Investment Life is trading at a lower price-to-earnings ratio than Primerica, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
American Equity Investment Life has a beta of 1.49, indicating that its stock price is 49% more volatile than the S&P 500. Comparatively, Primerica has a beta of 1.44, indicating that its stock price is 44% more volatile than the S&P 500.
Analyst Recommendations
This is a summary of current ratings and price targets for American Equity Investment Life and Primerica, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
---|
American Equity Investment Life | 0 | 2 | 5 | 0 | 2.71 |
Primerica | 0 | 0 | 3 | 0 | 3.00 |
American Equity Investment Life presently has a consensus price target of $32.4444, indicating a potential upside of 15.46%. Primerica has a consensus price target of $157.25, indicating a potential upside of 7.22%. Given American Equity Investment Life's higher probable upside, research analysts plainly believe American Equity Investment Life is more favorable than Primerica.
Institutional & Insider Ownership
96.7% of American Equity Investment Life shares are owned by institutional investors. Comparatively, 89.0% of Primerica shares are owned by institutional investors. 1.9% of American Equity Investment Life shares are owned by insiders. Comparatively, 0.9% of Primerica shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
Profitability
This table compares American Equity Investment Life and Primerica's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
American Equity Investment Life | N/A | 9.89% | 0.70% |
Primerica | 17.65% | 23.65% | 2.80% |
Dividends
American Equity Investment Life pays an annual dividend of $0.32 per share and has a dividend yield of 1.1%. Primerica pays an annual dividend of $1.88 per share and has a dividend yield of 1.3%. American Equity Investment Life pays out 5.4% of its earnings in the form of a dividend. Primerica pays out 22.3% 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. Primerica has increased its dividend for 1 consecutive years. Primerica is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Summary
Primerica beats American Equity Investment Life on 10 of the 17 factors compared between the two stocks.