Critical Analysis: Emergent Capital (EMGC) versus American Equity Investment Life (AEL)
Emergent Capital (OTCMKTS: EMGC) and American Equity Investment Life (NYSE:AEL) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, profitability, valuation, risk, institutional ownership and earnings.
American Equity Investment Life pays an annual dividend of $0.26 per share and has a dividend yield of 0.8%. Emergent Capital does not pay a dividend. American Equity Investment Life pays out 9.0% of its earnings in the form of a dividend. Emergent Capital has raised its dividend for 4 consecutive years.
Risk & Volatility
Emergent Capital has a beta of 0.05, suggesting that its stock price is 95% less volatile than the S&P 500. Comparatively, American Equity Investment Life has a beta of 2.54, suggesting that its stock price is 154% more volatile than the S&P 500.
This is a summary of recent recommendations and price targets for Emergent Capital and American Equity Investment Life, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|American Equity Investment Life||0||6||1||0||2.14|
American Equity Investment Life has a consensus price target of $28.14, indicating a potential downside of 11.86%. Given American Equity Investment Life’s higher probable upside, analysts clearly believe American Equity Investment Life is more favorable than Emergent Capital.
Earnings & Valuation
This table compares Emergent Capital and American Equity Investment Life’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Emergent Capital||$1.12 million||55.68||-$49.68 million||N/A||N/A|
|American Equity Investment Life||$2.22 billion||1.28||$83.24 million||$2.88||11.09|
American Equity Investment Life has higher revenue and earnings than Emergent Capital.
This table compares Emergent Capital and American Equity Investment Life’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|American Equity Investment Life||7.90%||10.50%||0.46%|
Insider & Institutional Ownership
93.9% of American Equity Investment Life shares are held by institutional investors. 33.3% of Emergent Capital shares are held by insiders. Comparatively, 4.1% of American Equity Investment Life shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
American Equity Investment Life beats Emergent Capital on 9 of the 14 factors compared between the two stocks.
About Emergent Capital
Emergent Capital, Inc., formerly Imperial Holdings, Inc., is a specialty finance company that invests in asset classes, primarily life settlements. The Company, through its subsidiary companies, owns a portfolio of approximately 630 life insurance policies (life settlements). The Company purchases individual policies and portfolios of life insurance policies and manages those assets based on actuarial and market data. The Company provides customized liquidity solutions to owners of illiquid financial assets in two markets, which include life finance and structured settlements. The Company focuses on lending to outright purchases of portfolios, to tertiary trades, as well as individual secondary market purchases. The Company invests in short and long-term life settlement investments.
About American Equity Investment Life
American Equity Investment Life Holding Company is engaged in the development and sale of fixed index and fixed rate annuity products. The Company issues fixed annuity and life insurance products through its life insurance subsidiaries, American Equity Investment Life Insurance Company, American Equity Investment Life Insurance Company of New York and Eagle Life Insurance Company. Its target market includes the group of individuals aged 45 to 75 seeking to accumulate tax-deferred savings or create guaranteed lifetime income. The Company distributes through a range of distribution channels, including independent agents, broker/dealers, banks and registered investment advisors. Its product types include fixed index annuities, annual reset fixed rate annuities, multi-year fixed rate annuities and single premium immediate annuities. Its life insurance products include traditional ordinary and term, universal life and other interest-sensitive life insurance products.
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