Critical Analysis: Stewart Information Services (NYSE:STC) versus Aegon (NYSE:AEG)

Aegon (NYSE:AEG) and Stewart Information Services (NYSE:STC) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their earnings, risk, institutional ownership, profitability, dividends, analyst recommendations and valuation.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Aegon and Stewart Information Services, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Aegon	1	3	2	1	2.43
Stewart Information Services	1	1	4	0	2.50

Aegon currently has a consensus price target of $10.00, suggesting a potential upside of 8.52%. Stewart Information Services has a consensus price target of $81.50, suggesting a potential upside of 17.51%. Given Stewart Information Services’ stronger consensus rating and higher probable upside, analysts plainly believe Stewart Information Services is more favorable than Aegon.

Volatility & Risk

Aegon has a beta of 0.84, suggesting that its stock price is 16% less volatile than the S&P 500. Comparatively, Stewart Information Services has a beta of 0.98, suggesting that its stock price is 2% less volatile than the S&P 500.

Earnings & Valuation

This table compares Aegon and Stewart Information Services”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Aegon	$10.29 billion	1.80	$1.11 billion	($0.16)	-57.59
Stewart Information Services	$2.92 billion	0.72	$115.54 million	$4.56	15.21

Aegon has higher revenue and earnings than Stewart Information Services. Aegon is trading at a lower price-to-earnings ratio than Stewart Information Services, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

4.3% of Aegon shares are owned by institutional investors. Comparatively, 96.9% of Stewart Information Services shares are owned by institutional investors. 2.9% of Stewart Information Services shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

Aegon pays an annual dividend of $0.41 per share and has a dividend yield of 4.4%. Stewart Information Services pays an annual dividend of $2.10 per share and has a dividend yield of 3.0%. Aegon pays out -256.2% of its earnings in the form of a dividend. Stewart Information Services pays out 46.1% 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. Stewart Information Services has increased its dividend for 4 consecutive years. Aegon is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Aegon and Stewart Information Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Aegon	N/A	N/A	N/A
Stewart Information Services	4.12%	10.02%	5.12%

Summary

Stewart Information Services beats Aegon on 12 of the 18 factors compared between the two stocks.

About Aegon

Aegon Ltd. provides insurance, pensions, retirement, and asset management services in the United States, the Netherlands, the United Kingdom, and internationally. The company offers life, accident, property and casualty, and health insurance; annuities, retirement plans, mutual funds, and stable value solutions; residential mortgage and digital baking services; and retail and institutional investment management solutions and retirement savings vehicles and strategies. It offers its products under the Aegon and Transamerica brands. Aegon Ltd. was founded in 1844 and is headquartered in The Hague, the Netherlands.

About Stewart Information Services

Stewart Information Services Corporation, through its subsidiaries, provides title insurance and real estate transaction related services in the United States and internationally. The company involves in searching, examining, closing, and insuring the condition of the title to real property. It also offers home and personal insurance services; services for tax-deferred exchanges; and digital customer engagement platform services. It also provides appraisal management, online notarization and closing, credit and real estate information, and search and valuation services. The company serves homebuyers and sellers, residential and commercial real estate professionals, mortgage lenders and servicers, title agencies and real estate attorneys, and home builders through direct operations, network of independent agencies, and other businesses. The company was founded in 1893 and is headquartered in Houston, Texas.