Financial Contrast: American Financial Group (NYSE:AFG) and Investors Title (NASDAQ:ITIC)

American Financial Group (NYSE:AFG) and Investors Title (NASDAQ:ITIC) are both finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their valuation, institutional ownership, analyst recommendations, profitability, dividends, risk and earnings.

Analyst Recommendations

This is a breakdown of current ratings and price targets for American Financial Group and Investors Title, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
American Financial Group	0	3	2	0	2.40
Investors Title	0	0	1	0	3.00

American Financial Group presently has a consensus target price of $145.00, suggesting a potential upside of 4.42%. Given American Financial Group’s higher probable upside, equities research analysts clearly believe American Financial Group is more favorable than Investors Title.

Earnings & Valuation

This table compares American Financial Group and Investors Title”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
American Financial Group	$8.17 billion	1.41	$842.00 million	$10.52	13.20
Investors Title	$272.76 million	1.90	$35.18 million	$20.10	13.64

American Financial Group has higher revenue and earnings than Investors Title. American Financial Group is trading at a lower price-to-earnings ratio than Investors Title, indicating that it is currently the more affordable of the two stocks.

Dividends

American Financial Group pays an annual dividend of $3.52 per share and has a dividend yield of 2.5%. Investors Title pays an annual dividend of $1.84 per share and has a dividend yield of 0.7%. American Financial Group pays out 33.5% of its earnings in the form of a dividend. Investors Title pays out 9.2% 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 Financial Group has raised its dividend for 19 consecutive years. American Financial Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

American Financial Group has a beta of 0.64, suggesting that its stock price is 36% less volatile than the S&P 500. Comparatively, Investors Title has a beta of 0.65, suggesting that its stock price is 35% less volatile than the S&P 500.

Profitability

This table compares American Financial Group and Investors Title’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
American Financial Group	10.76%	19.50%	2.82%
Investors Title	13.59%	14.03%	10.62%

Insider and Institutional Ownership

64.4% of American Financial Group shares are held by institutional investors. Comparatively, 41.4% of Investors Title shares are held by institutional investors. 16.9% of American Financial Group shares are held by company insiders. Comparatively, 26.0% of Investors Title shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

Investors Title beats American Financial Group on 9 of the 17 factors compared between the two stocks.

About American Financial Group

American Financial Group, Inc., an insurance holding company, provides specialty property and casualty insurance products in the United States. The company offers property and transportation insurance products, such as physical damage and liability coverage for buses and trucks, inland and ocean marine, agricultural-related products, and other commercial property and specialty transportation coverages; specialty casualty insurance, including primarily excess and surplus, executive and professional liability, general liability, umbrella and excess liability, and specialty coverage in targeted markets, as well as customized programs for small to mid-sized businesses and workers’ compensation insurance; and specialty financial insurance products comprising risk management insurance programs for lending and leasing institutions, fidelity and surety products, and trade credit insurance. It sells its property and casualty insurance products through independent insurance agents and brokers. The company was founded in 1872 and is headquartered in Cincinnati, Ohio.

About Investors Title

Investors Title Company engages in the issuance of residential and commercial title insurance for residential, institutional, commercial, and industrial properties. The company underwrites land title insurance for owners and mortgagees as a primary insurer; and assumes the reinsurance of title insurance risks from other title insurance companies. It offers services in connection with tax-deferred exchanges of like-kind property; acts as a qualified intermediary in tax-deferred exchanges of property; coordinates the exchange aspects of the real estate transaction, such as drafting standard exchange documents, holding the exchange funds between the sale of the old property and the purchase of the new property, and accepting the formal identification of the replacement property. In addition, it serves as an exchange accommodation titleholder for accomplishing reverse exchanges when the taxpayers decide to acquire replacement property before selling the relinquished property. Further, the company offers investment management and trust services to individuals, companies, banks, and trusts; and consulting and management services to clients to start and operate a title insurance agency. It issues title insurance policies directly and through a network of agents in 22 states and the District of Columbia, primarily in the eastern half of the United States. Investors Title Company was founded in 1972 and is headquartered in Chapel Hill, North Carolina.