Critical Contrast: Willis Towers Watson Public (NASDAQ:WTW) versus American International Group (NYSE:AIG)

Willis Towers Watson Public (NASDAQ:WTW) and American International Group (NYSE:AIG) are both large-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, analyst recommendations, institutional ownership, dividends, profitability, valuation and risk.

Volatility and Risk

Willis Towers Watson Public has a beta of 0.41, indicating that its stock price is 59% less volatile than the S&P 500. Comparatively, American International Group has a beta of 0.5, indicating that its stock price is 50% less volatile than the S&P 500.

Insider & Institutional Ownership

93.1% of Willis Towers Watson Public shares are held by institutional investors. Comparatively, 90.6% of American International Group shares are held by institutional investors. 0.4% of Willis Towers Watson Public shares are held by insiders. Comparatively, 0.6% of American International Group shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Willis Towers Watson Public and American International Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Willis Towers Watson Public	0	5	11	0	2.69
American International Group	0	11	8	0	2.42

Willis Towers Watson Public currently has a consensus price target of $368.60, suggesting a potential upside of 27.73%. American International Group has a consensus price target of $88.16, suggesting a potential upside of 17.07%. Given Willis Towers Watson Public’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Willis Towers Watson Public is more favorable than American International Group.

Profitability

This table compares Willis Towers Watson Public and American International Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Willis Towers Watson Public	15.49%	22.19%	6.00%
American International Group	11.13%	11.05%	2.78%

Earnings and Valuation

This table compares Willis Towers Watson Public and American International Group”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Willis Towers Watson Public	$9.71 billion	2.76	$1.60 billion	$16.26	17.75
American International Group	$26.77 billion	1.47	$3.10 billion	$5.47	13.77

American International Group has higher revenue and earnings than Willis Towers Watson Public. American International Group is trading at a lower price-to-earnings ratio than Willis Towers Watson Public, indicating that it is currently the more affordable of the two stocks.

Dividends

Willis Towers Watson Public pays an annual dividend of $3.84 per share and has a dividend yield of 1.3%. American International Group pays an annual dividend of $2.00 per share and has a dividend yield of 2.7%. Willis Towers Watson Public pays out 23.6% of its earnings in the form of a dividend. American International Group pays out 36.6% 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. Willis Towers Watson Public has raised its dividend for 8 consecutive years and American International Group has raised its dividend for 3 consecutive years.

Summary

Willis Towers Watson Public beats American International Group on 12 of the 17 factors compared between the two stocks.

About Willis Towers Watson Public

Willis Towers Watson Public Limited Company operates as an advisory, broking, and solutions company worldwide. It operates through two segments: Health, Wealth & Career and Risk & Broking. The company offers strategy and design consulting, plan management service and support, broking and administration services for health, wellbeing, and other group benefit program, including medical, dental, disability, life, voluntary benefits and other coverages; actuarial support, plan design, and administrative services for pension and retirement savings plans; retirement consulting services and solutions; and integrated solutions that consists of investment discretionary management, pension administration, core actuarial, and communication and change management assistance services. It also provides advice, data, software, and products to address clients' total rewards and talent issues; and risk advice, insurance brokerage, and consulting services in the areas of property and casualty, affinity, risk and analytics, aerospace, construction, global markets direct & facultative, financial, executive and professional risks, financial solutions, crisis management, surety, marine, and natural resources. In addition, the company offers integrated solutions that consists of investment discretionary management, pension administration, core actuarial, and communication and change management assistance services; and software and technology, risk and capital management, products and product pricing, financial and regulatory reporting, financial and capital modeling, M&A, outsourcing, and business management services. The company was formerly known as Willis Group Holdings Public Limited Company and changed its name to Willis Towers Watson Public Limited Company in January 2016. Willis Towers Watson Public Limited Company was founded in 1828 and is based in London, the United Kingdom.

About American International Group

American International Group, Inc. offers insurance products for commercial, institutional, and individual customers in North America and internationally. It operates through three segments: General Insurance, Life and Retirement, and Other Operations. The General Insurance segment provides commercial and industrial property insurance, including business interruption and package insurance that cover exposure to made and natural disasters; general liability, environmental, commercial automobile liability, workers’ compensation, excess casualty, and crisis management insurance products; and professional liability insurance. This segment offers marine, energy-related property insurance, aviation, political risk, trade credit, trade finance, and portfolio solutions, as well as operates reinsurance business; voluntary and sponsor-paid personal accident, and supplemental health products; and personal auto and personal property insurance. Its Life and Retirement segment offers individual retirement products, including variable, fixed index, and fixed annuities, as well as retail mutual funds; group retirement products comprising record-keeping, plan administrative and compliance services, financial planning, and advisory solutions; life insurance, including term and universal life insurance; and institutional markets products, which includes wrap products, structured settlement, pension risk transfer annuities, corporate and bank-owned life insurance, high net worth, and guaranteed investment contract products. It distributes its products through a network of brokers, agents, advisors, banks, and other distributors. The company was founded in 1919 and is headquartered in New York, New York.