Arthur J. Gallagher & Co. (NYSE:AJG) and The Hanover Insurance Group (NYSE:THG) Head-To-Head Analysis

Arthur J. Gallagher & Co. (NYSE:AJG) and The Hanover Insurance Group (NYSE:THG) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their dividends, risk, institutional ownership, earnings, analyst recommendations, valuation and profitability.

Insider & Institutional Ownership

85.5% of Arthur J. Gallagher & Co. shares are owned by institutional investors. Comparatively, 86.6% of The Hanover Insurance Group shares are owned by institutional investors. 1.4% of Arthur J. Gallagher & Co. shares are owned by insiders. Comparatively, 2.8% of The Hanover Insurance Group shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

Arthur J. Gallagher & Co. pays an annual dividend of $2.80 per share and has a dividend yield of 1.0%. The Hanover Insurance Group pays an annual dividend of $3.80 per share and has a dividend yield of 1.5%. Arthur J. Gallagher & Co. pays out 42.8% of its earnings in the form of a dividend. The Hanover Insurance Group pays out 18.2% 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. Arthur J. Gallagher & Co. has raised its dividend for 15 consecutive years and The Hanover Insurance Group has raised its dividend for 20 consecutive years. The Hanover Insurance Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Arthur J. Gallagher & Co. has a beta of 0.47, suggesting that its stock price is 53% less volatile than the S&P 500. Comparatively, The Hanover Insurance Group has a beta of 0.24, suggesting that its stock price is 76% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Arthur J. Gallagher & Co. and The Hanover Insurance Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arthur J. Gallagher & Co.	0	7	13	0	2.65
The Hanover Insurance Group	0	5	3	2	2.70

Arthur J. Gallagher & Co. currently has a consensus price target of $292.32, indicating a potential upside of 3.44%. The Hanover Insurance Group has a consensus price target of $236.62, indicating a potential downside of 4.70%. Given Arthur J. Gallagher & Co.’s higher possible upside, equities research analysts plainly believe Arthur J. Gallagher & Co. is more favorable than The Hanover Insurance Group.

Profitability

This table compares Arthur J. Gallagher & Co. and The Hanover Insurance Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Arthur J. Gallagher & Co.	10.39%	13.90%	4.26%
The Hanover Insurance Group	10.97%	21.63%	4.58%

Valuation & Earnings

This table compares Arthur J. Gallagher & Co. and The Hanover Insurance Group”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arthur J. Gallagher & Co.	$13.94 billion	5.20	$1.49 billion	$6.54	43.21
The Hanover Insurance Group	$6.59 billion	1.29	$662.50 million	$20.91	11.87

Arthur J. Gallagher & Co. has higher revenue and earnings than The Hanover Insurance Group. The Hanover Insurance Group is trading at a lower price-to-earnings ratio than Arthur J. Gallagher & Co., indicating that it is currently the more affordable of the two stocks.

Summary

The Hanover Insurance Group beats Arthur J. Gallagher & Co. on 11 of the 18 factors compared between the two stocks.

About Arthur J. Gallagher & Co.

Arthur J. Gallagher & Co. is a global insurance brokerage and risk management services firm. It helps businesses and other organizations assess and manage risk, arrange insurance coverage, and address employee benefits needs. The company’s services include insurance brokerage, risk management consulting, employee benefits consulting, and claims and settlement services through its Gallagher Bassett business. It serves clients in the United States and internationally, including through a network of correspondent brokers.

About The Hanover Insurance Group

The Hanover Insurance Group, Inc. is a property and casualty insurer founded in 1852 as the Hanover Fire Insurance Company. Headquartered in Worcester, Massachusetts, it provides insurance products and services primarily in the United States. The company offers personal insurance, including coverage for homes and automobiles, as well as commercial insurance for businesses. Its commercial offerings include coverage for small and midsize businesses and specialty risks. The Hanover distributes its products mainly through independent insurance agents and brokers, working with them to serve individuals, families, and businesses.