AVIVA PLC/ADR (OTCMKTS:AVVIY) and American Equity Investment Life (NYSE:AEL) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, earnings, profitability, dividends, risk, analyst recommendations and institutional ownership.

Analyst Recommendations

This is a summary of current recommendations and price targets for AVIVA PLC/ADR and American Equity Investment Life, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AVIVA PLC/ADR 0 2 1 0 2.33
American Equity Investment Life 0 3 3 0 2.50

American Equity Investment Life has a consensus target price of $34.33, suggesting a potential downside of 2.74%. Given American Equity Investment Life’s stronger consensus rating and higher possible upside, analysts plainly believe American Equity Investment Life is more favorable than AVIVA PLC/ADR.

Valuation and Earnings

This table compares AVIVA PLC/ADR and American Equity Investment Life’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
AVIVA PLC/ADR $63.97 billion 0.41 $1.93 billion $1.39 9.33
American Equity Investment Life $3.89 billion 0.82 $174.64 million $3.16 11.17

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

Dividends

AVIVA PLC/ADR pays an annual dividend of $0.45 per share and has a dividend yield of 3.5%. American Equity Investment Life pays an annual dividend of $0.26 per share and has a dividend yield of 0.7%. AVIVA PLC/ADR pays out 32.4% of its earnings in the form of a dividend. American Equity Investment Life pays out 8.2% 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. American Equity Investment Life has increased its dividend for 5 consecutive years.

Risk & Volatility

AVIVA PLC/ADR has a beta of 1.08, indicating that its stock price is 8% more volatile than the S&P 500. Comparatively, American Equity Investment Life has a beta of 2.53, indicating that its stock price is 153% more volatile than the S&P 500.

Institutional & Insider Ownership

0.3% of AVIVA PLC/ADR shares are held by institutional investors. Comparatively, 94.7% of American Equity Investment Life shares are held by institutional investors. 1.9% of American Equity Investment Life shares are held by company 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 AVIVA PLC/ADR and American Equity Investment Life’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AVIVA PLC/ADR N/A N/A N/A
American Equity Investment Life 11.14% 12.32% 0.53%

Summary

American Equity Investment Life beats AVIVA PLC/ADR on 14 of the 17 factors compared between the two stocks.

AVIVA PLC/ADR Company Profile

Aviva plc provides various insurance and savings products primarily in the United Kingdom, rest of Europe, Canada, and Asia. The company offers life insurance, long term health and accident insurance, pension, and annuity products; and lifetime mortgage products. It also provides insurance cover to individuals, and small and medium-sized businesses for risks associated primarily with motor vehicles, property, and medical expenses, as well as liabilities, such as employers' and professional indemnity liabilities. In addition, the company offers home, commercial, pet, travel, critical illness, income protection, and private medical life insurance products. Further, it provides investment management services for institutional pension fund mandates; and manages various retail investment products, including investment funds, unit trusts, open-ended investment companies, and ISAs for third-party financial institutions, pension funds, public sector organizations, investment professionals, and private investors. The company markets its products through a network of insurance brokers, as well as MyAviva, an online platform. The company was formerly known as CGNU plc and changed its name to Aviva plc in July 2002. Aviva plc was founded in 1696 and is headquartered in London, the United Kingdom.

American Equity Investment Life Company Profile

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.

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