AON (NYSE:AON) vs. Lemonade (NYSE:LMND) Critical Review

AON (NYSE:AON) and Lemonade (NYSE:LMND) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their risk, analyst recommendations, dividends, institutional ownership, profitability, valuation and earnings.

Insider and Institutional Ownership

86.1% of AON shares are held by institutional investors. Comparatively, 80.3% of Lemonade shares are held by institutional investors. 1.0% of AON shares are held by company insiders. Comparatively, 12.2% of Lemonade shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares AON and Lemonade”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AON	$17.18 billion	3.39	$3.69 billion	$18.14	15.15
Lemonade	$737.90 million	4.70	-$165.50 million	($1.83)	-24.47

AON has higher revenue and earnings than Lemonade. Lemonade is trading at a lower price-to-earnings ratio than AON, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for AON and Lemonade, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AON	2	6	12	0	2.50
Lemonade	1	4	4	0	2.33

AON presently has a consensus price target of $367.59, suggesting a potential upside of 33.75%. Lemonade has a consensus price target of $63.50, suggesting a potential upside of 41.81%. Given Lemonade’s higher probable upside, analysts clearly believe Lemonade is more favorable than AON.

Risk & Volatility

AON has a beta of 0.7, indicating that its share price is 30% less volatile than the S&P 500. Comparatively, Lemonade has a beta of 1.87, indicating that its share price is 87% more volatile than the S&P 500.

Profitability

This table compares AON and Lemonade’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AON	22.27%	42.13%	7.57%
Lemonade	-14.19%	-26.78%	-7.08%

Summary

AON beats Lemonade on 10 of the 14 factors compared between the two stocks.

About AON

Aon Plc engages in the provision of risk, health, and wealth solutions. It focuses on risk capital including claim management, reinsurance, risk analysis, management, retention, and transfer; and human capital involving analytics, health and benefits, investments, pensions and retirement, talent and rewards, and workplace wellbeing. The company was founded in 1982 and is headquartered in Dublin, Ireland.

About Lemonade

Lemonade, Inc. provides various insurance products through various channels in the United States, Europe, and the United Kingdom. Its insurance products include stolen or damaged property, and personal liability that protects its customers if they are responsible for an accident or damage to another person or their property. The company also offers renters, homeowners, car, pet, and life insurance products, as well as landlord insurance policies. In addition, it operates as an agent for other insurance companies. The company was formerly known as Lemonade Group, Inc. and changed its name to Lemonade, Inc. Lemonade, Inc. was incorporated in 2015 and is headquartered in New York, New York.