American Equity Investment Life (NYSE: AEL) and Swiss Re (OTCMKTS:SSREY) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, profitability, institutional ownership, earnings, dividends, risk and analyst recommendations.

Profitability

This table compares American Equity Investment Life and Swiss Re’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
American Equity Investment Life 8.49% 11.22% 0.50%
Swiss Re N/A N/A N/A

Institutional and Insider Ownership

93.6% of American Equity Investment Life shares are owned by institutional investors. Comparatively, 0.1% of Swiss Re shares are owned by institutional investors. 1.9% of American Equity Investment Life shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares American Equity Investment Life and Swiss Re’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
American Equity Investment Life $3.89 billion 0.84 $174.64 million $3.16 11.52
Swiss Re $42.49 billion 0.75 $398.00 million $0.26 85.06

Swiss Re has higher revenue and earnings than American Equity Investment Life. American Equity Investment Life is trading at a lower price-to-earnings ratio than Swiss Re, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings and target prices for American Equity Investment Life and Swiss Re, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
American Equity Investment Life 0 4 2 0 2.33
Swiss Re 1 3 2 0 2.17

American Equity Investment Life presently has a consensus target price of $31.67, suggesting a potential downside of 13.00%. Given American Equity Investment Life’s stronger consensus rating and higher probable upside, analysts clearly believe American Equity Investment Life is more favorable than Swiss Re.

Dividends

American Equity Investment Life pays an annual dividend of $0.26 per share and has a dividend yield of 0.7%. Swiss Re pays an annual dividend of $1.04 per share and has a dividend yield of 4.7%. American Equity Investment Life pays out 8.2% of its earnings in the form of a dividend. Swiss Re pays out 400.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. American Equity Investment Life has increased its dividend for 5 consecutive years.

Volatility and Risk

American Equity Investment Life has a beta of 2.48, suggesting that its share price is 148% more volatile than the S&P 500. Comparatively, Swiss Re has a beta of 0.55, suggesting that its share price is 45% less volatile than the S&P 500.

Summary

American Equity Investment Life beats Swiss Re on 12 of the 16 factors compared between the two stocks.

About American Equity Investment Life

American Equity Investment Life Holding Company, through its subsidiaries, provides life insurance products and services in the United States. The company issues fixed index and rate annuities; and single premium immediate annuities, as well as life insurance products. The company markets its products through various distribution channels, including national marketing organizations, broker/dealers, banks, and registered investment advisors. American Equity Investment Life Holding Company was founded in 1995 and is based in West Des Moines, Iowa.

About Swiss Re

Swiss Re Ltd, together with its subsidiaries, provides wholesale reinsurance, insurance, and other insurance-based forms of risk transfer worldwide. The company operates through four segments: Property & Casualty Reinsurance, Life & Health Reinsurance, Corporate Solutions, and Life Capital. It underwrites casualty, property and specialty, agriculture, aviation, engineering, marine, life and health, retakaful, solvency II, and facultative reinsurance products, as well as trade credit, surety, and political risk reinsurance; structured reinsurance solutions; and insurance-linked securities. The company also offers customized products and standard insurance covers; and manages closed and open life and health insurance books. The company serves insurance companies, mid-to-large-sized corporations, and public sector clients. Swiss Re Ltd was founded in 1863 and is headquartered in Zurich, Switzerland.

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