American International Group (NYSE:AIG) versus Prudential Financial (NYSE:PRU) Financial Review

American International Group (NYSE:AIG) and Prudential Financial (NYSE:PRU) are both large-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, earnings, dividends, profitability, valuation and risk.

Dividends

American International Group pays an annual dividend of $1.80 per share and has a dividend yield of 2.3%. Prudential Financial pays an annual dividend of $5.40 per share and has a dividend yield of 5.3%. American International Group pays out 34.1% of its earnings in the form of a dividend. Prudential Financial pays out 119.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. American International Group has increased its dividend for 3 consecutive years and Prudential Financial has increased its dividend for 2 consecutive years.

Insider and Institutional Ownership

90.6% of American International Group shares are held by institutional investors. Comparatively, 56.8% of Prudential Financial shares are held by institutional investors. 0.6% of American International Group shares are held by insiders. Comparatively, 0.3% of Prudential Financial shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings and Valuation

This table compares American International Group and Prudential Financial”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
American International Group	$27.25 billion	1.60	-$1.40 billion	$5.28	14.95
Prudential Financial	$59.52 billion	0.60	$2.73 billion	$4.51	22.67

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

Analyst Ratings

This is a breakdown of recent recommendations and price targets for American International Group and Prudential Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
American International Group	0	10	9	2	2.62
Prudential Financial	1	10	1	0	2.00

American International Group currently has a consensus target price of $89.81, indicating a potential upside of 13.79%. Prudential Financial has a consensus target price of $122.27, indicating a potential upside of 19.60%. Given Prudential Financial’s higher possible upside, analysts clearly believe Prudential Financial is more favorable than American International Group.

Risk and Volatility

American International Group has a beta of 0.68, indicating that its stock price is 32% less volatile than the S&P 500. Comparatively, Prudential Financial has a beta of 1.04, indicating that its stock price is 4% more volatile than the S&P 500.

Profitability

This table compares American International Group and Prudential Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
American International Group	11.51%	7.88%	2.04%
Prudential Financial	2.75%	15.80%	0.64%

Summary

American International Group beats Prudential Financial on 11 of the 18 factors compared between the two stocks.

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.

About Prudential Financial

Prudential Financial, Inc., together with its subsidiaries, provides insurance, investment management, and other financial products and services in the United States and internationally. It operates through PGIM, Retirement Strategies, Group Insurance, Individual Life, and International Businesses segments. The PGIM segment offers investment management services and solutions related to public fixed income, public equity, real estate debt and equity, private credit and other alternatives, and multi-asset class strategies to institutional and retail clients, as well as its general account. The Retirement Strategies segment provides a range of retirement investment, and income products and services to retirement plan sponsors in the public, private, and not-for-profit sectors; develops and distributes individual variable and fixed annuity products. The Group Insurance segment offers various group life, and long-term and short-term group disability, as well as group corporate-, bank-, and trust-owned life insurance in the United States primarily for institutional clients for use in connection with employee and membership benefits plans; sells accidental death and dismemberment, and other supplemental health solutions; and plan administration services in connection with its insurance coverages. The Individual Life segment develops and distributes variable life, universal life, and term life insurance products. The International Businesses segment develops and distributes life insurance, retirement products, investment products, and certain accident and health products; and advisory services. The company provides its products and services to individual and institutional customers through its proprietary and third-party distribution networks. Prudential Financial, Inc. was founded in 1875 and is headquartered in Newark, New Jersey.