Aflac (NYSE: AFL) and Metlife (NYSE:MET) are both large-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, profitability, dividends, risk, valuation, analyst recommendations and institutional ownership.

Insider & Institutional Ownership

65.6% of Aflac shares are held by institutional investors. Comparatively, 74.2% of Metlife shares are held by institutional investors. 3.0% of Aflac shares are held by company insiders. Comparatively, 0.3% of Metlife shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

Aflac pays an annual dividend of $1.72 per share and has a dividend yield of 2.0%. Metlife pays an annual dividend of $1.60 per share and has a dividend yield of 3.0%. Aflac pays out 25.9% of its earnings in the form of a dividend. Metlife pays out 1,778.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Aflac has raised its dividend for 4 consecutive years and Metlife has raised its dividend for 34 consecutive years. Metlife is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Aflac and Metlife’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Aflac 11.98% 13.09% 2.05%
Metlife 5.14% 4.89% 0.39%

Volatility and Risk

Aflac has a beta of 0.96, indicating that its stock price is 4% less volatile than the S&P 500. Comparatively, Metlife has a beta of 1.47, indicating that its stock price is 47% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and price targets for Aflac and Metlife, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Aflac 3 5 2 0 1.90
Metlife 1 6 7 0 2.43

Aflac presently has a consensus target price of $77.33, suggesting a potential downside of 8.13%. Metlife has a consensus target price of $58.24, suggesting a potential upside of 10.15%. Given Metlife’s stronger consensus rating and higher possible upside, analysts clearly believe Metlife is more favorable than Aflac.

Valuation & Earnings

This table compares Aflac and Metlife’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Aflac $22.65 billion 1.47 $4.75 billion $6.63 12.70
Metlife $63.21 billion 0.89 $817.50 million $0.09 587.51

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

Summary

Aflac beats Metlife on 9 of the 17 factors compared between the two stocks.

Aflac Company Profile

Aflac Incorporated is a business holding company. The Company is involved in supplemental health and life insurance, which is marketed and administered through its subsidiary, American Family Life Assurance Company of Columbus (Aflac). The Company’s insurance business consists of two segments: Aflac Japan and Aflac U.S. The Company designs the United States insurance products to provide supplemental coverage for people having medical or primary insurance coverage. Aflac U.S. offers accident coverage on both an individual and group basis. The Company offers cancer plans, critical illness plans, and critical care and recovery plans. The Company designs the United States insurance products to provide supplemental coverage for people having medical or primary insurance coverage. Aflac U.S. offers accident coverage on both an individual and group basis. The Company offers cancer plans, critical illness plans, and critical care and recovery plans.

Metlife Company Profile

MetLife, Inc. is a provider of life insurance, annuities, employee benefits and asset management. The Company’s segments include U.S.; Asia; Latin America; Europe, the Middle East and Africa (EMEA); MetLife Holdings, and Corporate & Other. Its U.S. segment is organized into Group Benefits, Retirement and Income Solutions and Property & Casualty businesses. Its Asia segment offers products, including life insurance; accident and health insurance, and retirement and savings products. Latin America offers products, including life insurance, and retirement and savings products. Life insurance includes universal, variable and term life products. EMEA offers products, including life insurance, accident and health insurance, retirement and savings products, and credit insurance.

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