XL Group (NYSE: XL) and Argo Group International (NASDAQ:AGII) are both finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitability, institutional ownership, risk, valuation, analyst recommendations, dividends and earnings.

Dividends

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XL Group pays an annual dividend of $0.88 per share and has a dividend yield of 2.4%. Argo Group International pays an annual dividend of $1.08 per share and has a dividend yield of 1.7%. XL Group pays out -71.5% of its earnings in the form of a dividend. Argo Group International pays out 63.5% 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. Argo Group International has increased its dividend for 5 consecutive years. XL Group is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares XL Group and Argo Group International’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
XL Group -2.51% -4.03% -0.83%
Argo Group International 3.15% 1.36% 0.31%

Analyst Recommendations

This is a breakdown of recent recommendations for XL Group and Argo Group International, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
XL Group 1 6 6 0 2.38
Argo Group International 1 0 1 0 2.00

XL Group currently has a consensus price target of $44.45, suggesting a potential upside of 21.43%. Argo Group International has a consensus price target of $71.00, suggesting a potential upside of 14.24%. Given XL Group’s stronger consensus rating and higher possible upside, equities research analysts clearly believe XL Group is more favorable than Argo Group International.

Volatility and Risk

XL Group has a beta of 1, suggesting that its stock price has a similar volatility profile to the S&P 500.Comparatively, Argo Group International has a beta of 0.82, suggesting that its stock price is 18% less volatile than the S&P 500.

Institutional and Insider Ownership

98.9% of XL Group shares are held by institutional investors. Comparatively, 86.3% of Argo Group International shares are held by institutional investors. 3.0% of XL Group shares are held by insiders. Comparatively, 4.9% of Argo Group International shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares XL Group and Argo Group International’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
XL Group $10.55 billion 0.89 $440.96 million ($1.23) -29.76
Argo Group International $1.58 billion 1.17 $146.70 million $1.70 36.56

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

Summary

XL Group beats Argo Group International on 9 of the 17 factors compared between the two stocks.

XL Group Company Profile

XL Group plc is an insurance and reinsurance company providing property, casualty and specialty products to industrial, commercial and professional firms, insurance companies and other enterprises. The Company operates through two segments: Insurance and Reinsurance. The Company’s Insurance segment is organized into four product divisions: Global Casualty (Casualty); Global Energy Property, & Construction (EPC); Global Professional (Professional), and Global Specialty (Specialty). Its insurance operations provide insurance policies for corporate risks that may require large limits, use of a captive insurance company and the need for a program of locally issued policies. The Reinsurance segment provides casualty, property risk, property catastrophe, specialty, and other reinsurance lines on a global basis with business being written on both a proportional and non-proportional treaty basis, and also on a facultative basis.

Argo Group International Company Profile

Argo Group International Holdings, Ltd. is an underwriter of specialty insurance and reinsurance products in the property and casualty market. The Company operates through four segments: Excess and Surplus Lines, Commercial Specialty, International Specialty and Syndicate 1200. Excess and Surplus Lines segment carriers focus on risks that the standard (admitted) market is unwilling or unable to underwrite. The Excess and Surplus Lines segment consists of two operating platforms: Colony Specialty and Argo Pro. Commercial Specialty segment provides property, casualty and surety coverages designed to meet the insurance needs of businesses within certain markets. International Specialty segment underwrites insurance and reinsurance risks. It operate as Argo Re, the Casualty and Professional Lines unit of Argo Insurance in Bermuda, and Argo Seguros Brazil, S.A. in Brazil. The Syndicate 1200 segment underwrites around the world property, specialty and non-United States liability insurance.

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