Alleghany (NYSE: Y) and Travelers Companies (NYSE:TRV) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, valuation, analyst recommendations, institutional ownership, earnings, profitability and dividends.

Valuation & Earnings

This table compares Alleghany and Travelers Companies’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Alleghany $6.13 billion 1.55 $456.92 million ($0.13) -4,753.54
Travelers Companies $28.90 billion 1.39 $2.06 billion $7.31 20.24

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

Profitability

This table compares Alleghany and Travelers Companies’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Alleghany 0.10% -0.14% -0.05%
Travelers Companies 7.13% 8.61% 1.98%

Institutional and Insider Ownership

82.2% of Alleghany shares are owned by institutional investors. Comparatively, 78.7% of Travelers Companies shares are owned by institutional investors. 4.0% of Alleghany shares are owned by insiders. Comparatively, 0.8% of Travelers Companies shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Travelers Companies pays an annual dividend of $2.88 per share and has a dividend yield of 1.9%. Alleghany does not pay a dividend. Travelers Companies pays out 39.4% of its earnings in the form of a dividend. Travelers Companies has increased its dividend for 9 consecutive years.

Analyst Ratings

This is a summary of recent recommendations for Alleghany and Travelers Companies, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alleghany 0 1 1 0 2.50
Travelers Companies 2 7 6 0 2.27

Alleghany presently has a consensus price target of $625.00, indicating a potential upside of 1.14%. Travelers Companies has a consensus price target of $134.03, indicating a potential downside of 9.41%. Given Alleghany’s stronger consensus rating and higher probable upside, equities analysts clearly believe Alleghany is more favorable than Travelers Companies.

Risk and Volatility

Alleghany has a beta of 0.94, meaning that its stock price is 6% less volatile than the S&P 500. Comparatively, Travelers Companies has a beta of 1.26, meaning that its stock price is 26% more volatile than the S&P 500.

Summary

Travelers Companies beats Alleghany on 11 of the 17 factors compared between the two stocks.

Alleghany Company Profile

Alleghany Corporation is an insurance holding company. The Company, through its subsidiary Alleghany Insurance Holdings LLC (AIHL) and its subsidiaries, is engaged in the property and casualty insurance business. AIHL’s insurance operations are conducted by its subsidiaries RSUI Group, Inc. (RSUI), CapSpecialty, Inc. (CapSpecialty) and Pacific Compensation Corporation (PacificComp). Its segments include reinsurance and insurance. Its reinsurance segment consists of property and casualty reinsurance operations conducted by Transatlantic Holdings, Inc. reinsurance operating subsidiaries. Its insurance segment consists of property and casualty insurance operations conducted by AIHL through its insurance operating subsidiaries RSUI, CapSpecialty and PacificComp. AIHL Re LLC, which is a captive reinsurance company, provides reinsurance to its insurance operating subsidiaries and affiliates.

Travelers Companies Company Profile

The Travelers Companies, Inc. is a holding company. The Company’s segments include Business and International Insurance; Bond & Specialty Insurance, and Personal Insurance. Through its subsidiaries, it provides commercial and personal property and casualty insurance products and services. The Business and International Insurance segment offers property and casualty insurance and insurance related services to its clients, in the United States and in Canada, as well as in the United Kingdom, the Republic of Ireland, Brazil and throughout other parts of the world. The Bond & Specialty Insurance segment provides surety, fidelity, management liability, professional liability, and other property and casualty coverages and related risk management services to a range of primarily domestic customers, utilizing various degrees of financially-based underwriting approaches. The Personal Insurance segment writes a range of property and casualty insurance covering individuals’ personal risks.

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