Critical Review: Assured Guaranty (NYSE:AGO) versus Allianz (OTCMKTS:ALIZY)

Assured Guaranty (NYSE:AGO) and Allianz (OTCMKTS:ALIZY) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, dividends, institutional ownership, analyst recommendations, valuation, earnings and risk.

Valuation and Earnings

This table compares Assured Guaranty and Allianz”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Assured Guaranty	$887.00 million	3.61	$503.00 million	$7.50	9.70
Allianz	$211.45 billion	0.91	$12.19 billion	$3.55	14.30

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

Risk & Volatility

Assured Guaranty has a beta of 0.73, meaning that its share price is 27% less volatile than the S&P 500. Comparatively, Allianz has a beta of 0.65, meaning that its share price is 35% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Assured Guaranty and Allianz, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Assured Guaranty	0	3	2	0	2.40
Allianz	0	2	2	1	2.80

Assured Guaranty currently has a consensus target price of $90.33, suggesting a potential upside of 24.18%. Given Assured Guaranty’s higher probable upside, analysts plainly believe Assured Guaranty is more favorable than Allianz.

Institutional & Insider Ownership

92.2% of Assured Guaranty shares are owned by institutional investors. Comparatively, 0.0% of Allianz shares are owned by institutional investors. 5.7% of Assured Guaranty shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Assured Guaranty and Allianz’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Assured Guaranty	37.34%	7.11%	3.25%
Allianz	6.31%	18.33%	1.16%

Dividends

Assured Guaranty pays an annual dividend of $1.52 per share and has a dividend yield of 2.1%. Allianz pays an annual dividend of $1.40 per share and has a dividend yield of 2.8%. Assured Guaranty pays out 20.3% of its earnings in the form of a dividend. Allianz pays out 39.4% 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. Assured Guaranty has raised its dividend for 7 consecutive years.

Summary

Assured Guaranty beats Allianz on 10 of the 17 factors compared between the two stocks.

About Assured Guaranty

Assured Guaranty Ltd., together with its subsidiaries, provides credit protection products to public finance, infrastructure, and structured finance markets in the United States and internationally. It operates through two segments: Insurance and Asset Management. The company offers financial guaranty insurance that protects holders of debt instruments and other monetary obligations from defaults in scheduled payments. It insures and reinsures various debt obligations, including bonds issued by the United States state governmental authorities; and notes issued to finance infrastructure projects. In addition, the company insures and reinsures various the U.S. public finance obligations, such as general obligation, tax-backed, municipal utility, transportation, healthcare, higher education, infrastructure, housing revenue, investor-owned utility, renewable energy, and other public finance bonds. Further, the company involved in insuring and reinsuring of non-U.S. public finance obligations comprising regulated utilities, infrastructure finance, sovereign and sub-sovereign, renewable energy bonds, pooled infrastructure, and other public finance obligations; and the U.S. and non-U.S. Structured finance obligations, including residential mortgage-backed securities, life insurance transactions, consumer receivables securities, subscription finance facilities, pooled corporate obligations, and financial products. Additionally, it offers specialty business, such as real estate properties, insurance securitizations, and aircraft residual value insurance (RVI) transactions; and asset management services comprising investment advisory services. It markets its financial guaranty insurance directly to issuers and underwriters of public finance and structured finance securities, as well as to investors in such obligations. Assured Guaranty Ltd. was incorporated in 2003 and is headquartered in Hamilton, Bermuda.

About Allianz

Allianz SE, together with its subsidiaries, provides property-casualty insurance, life/health insurance, and asset management products and services worldwide. The company’s Property-Casualty segment offers various insurance products, including motor liability and own damage, accident, general liability, fire and property, legal expense, credit, and travel to private and corporate customers. Its Life/Health segment provides a range of life and health insurance products on an individual and a group basis, such as annuities, endowment and term insurance, and unit-linked and investment-oriented products, as well as private and supplemental health, and long-term care insurance products. The company’s Asset Management segment offers institutional and retail asset management products and services to third-party investors comprising equity and fixed income funds, and multi-assets; and alternative investment products that include real estate, infrastructure debt/equity, real assets, liquid alternatives, and solutions. Its Corporate and Other segment provides banking services for retail clients, as well as digital investment services. Allianz SE was founded in 1890 and is headquartered in Munich, Germany.