Critical Review: Brighthouse Financial (NASDAQ:BHF) vs. AON (NYSE:AON)

Brighthouse Financial (NASDAQ:BHF) and AON (NYSE:AON) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, institutional ownership, profitability, dividends, valuation, analyst recommendations and earnings.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Brighthouse Financial and AON, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Brighthouse Financial	0	7	0	0	2.00
AON	2	6	12	0	2.50

Brighthouse Financial presently has a consensus price target of $61.25, suggesting a potential upside of 32.15%. AON has a consensus price target of $367.59, suggesting a potential upside of 19.90%. Given Brighthouse Financial’s higher possible upside, research analysts plainly believe Brighthouse Financial is more favorable than AON.

Valuation & Earnings

This table compares Brighthouse Financial and AON”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Brighthouse Financial	$6.77 billion	0.39	$433.00 million	$12.53	3.70
AON	$17.18 billion	3.79	$3.69 billion	$18.14	16.90

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

Institutional & Insider Ownership

81.2% of Brighthouse Financial shares are held by institutional investors. Comparatively, 86.1% of AON shares are held by institutional investors. 1.6% of Brighthouse Financial shares are held by insiders. Comparatively, 1.0% of AON shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Volatility and Risk

Brighthouse Financial has a beta of 0.83, suggesting that its stock price is 17% less volatile than the S&P 500. Comparatively, AON has a beta of 0.7, suggesting that its stock price is 30% less volatile than the S&P 500.

Profitability

This table compares Brighthouse Financial and AON’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Brighthouse Financial	12.49%	17.24%	0.45%
AON	22.27%	42.13%	7.57%

Summary

AON beats Brighthouse Financial on 11 of the 14 factors compared between the two stocks.

About Brighthouse Financial

Brighthouse Financial, Inc. provides annuity and life insurance products in the United States. It operates through three segments: Annuities, Life, and Run-off. The Annuities segment consists of variable, fixed, index-linked, and income annuities for contract holders’ needs for protected wealth accumulation on a tax-deferred basis, wealth transfer, and income security. The Life segment offers term, universal, whole, and variable life products for policyholders’ needs for financial security and protected wealth transfer. The Run-off segment manages structured settlements, pension risk transfer contracts, certain company-owned life insurance policies, funding agreements, and universal life with secondary guarantees. Brighthouse Financial, Inc. was founded in 1863 and is headquartered in Charlotte, North Carolina.

About AON

Aon Plc engages in the provision of risk, health, and wealth solutions. It focuses on risk capital including claim management, reinsurance, risk analysis, management, retention, and transfer; and human capital involving analytics, health and benefits, investments, pensions and retirement, talent and rewards, and workplace wellbeing. The company was founded in 1982 and is headquartered in Dublin, Ireland.