Financial Analysis: Axis Capital (NYSE:AXS) versus AON (NYSE:AON)

AON (NYSE:AON) and Axis Capital (NYSE:AXS) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, risk, valuation, analyst recommendations, earnings, dividends and profitability.

Institutional & Insider Ownership

86.1% of AON shares are owned by institutional investors. Comparatively, 93.4% of Axis Capital shares are owned by institutional investors. 1.0% of AON shares are owned by insiders. Comparatively, 0.6% of Axis Capital shares are owned 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.

Valuation & Earnings

This table compares AON and Axis Capital”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AON	$17.68 billion	4.04	$3.69 billion	$18.26	18.42
Axis Capital	$6.96 billion	1.12	$1.01 billion	$13.09	8.31

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

Dividends

AON pays an annual dividend of $3.28 per share and has a dividend yield of 1.0%. Axis Capital pays an annual dividend of $1.76 per share and has a dividend yield of 1.6%. AON pays out 18.0% of its earnings in the form of a dividend. Axis Capital pays out 13.4% 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. Axis Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of current recommendations and price targets for AON and Axis Capital, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AON	3	6	13	0	2.45
Axis Capital	0	5	9	0	2.64

AON presently has a consensus target price of $369.12, suggesting a potential upside of 9.76%. Axis Capital has a consensus target price of $120.00, suggesting a potential upside of 10.38%. Given Axis Capital’s stronger consensus rating and higher probable upside, analysts plainly believe Axis Capital is more favorable than AON.

Profitability

This table compares AON and Axis Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AON	22.24%	40.46%	7.20%
Axis Capital	14.62%	16.61%	2.71%

Risk & Volatility

AON has a beta of 0.63, indicating that its stock price is 37% less volatile than the S&P 500. Comparatively, Axis Capital has a beta of 0.39, indicating that its stock price is 61% less volatile than the S&P 500.

Summary

AON beats Axis Capital on 11 of the 16 factors compared between the two stocks.

About AON

Aon plc is a global professional services firm that helps organizations manage risk and make decisions about their people and finances. Its services include insurance brokerage, risk consulting, reinsurance solutions, employee benefits consulting and retirement and investment advisory services. The company serves businesses and institutions across a broad range of industries and geographies. Aon was formed in 1982 as Ryan Insurance Group and adopted the Aon name in 1987. It is headquartered in Dublin, Ireland, and operates internationally.

About Axis Capital

AXIS Capital Holdings Limited is a global specialty insurer and reinsurer headquartered in Bermuda. Founded in 2001, the company serves businesses and other clients through insurance and reinsurance operations. Its insurance offerings include coverage for property and casualty risks, professional liability, cyber, marine, aviation, energy, and accident and health. Its reinsurance business provides protection to other insurers across property, casualty, and specialty lines. AXIS operates in markets around the world, including North America, Europe, and Asia-Pacific.