Financial Review: Allstate (ALL) and Markel (MKL)

Allstate (NYSE: ALL) and Markel (NYSE:MKL) are both large-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, earnings, valuation, analyst recommendations, dividends, profitability and risk.

Dividends

Allstate pays an annual dividend of $1.48 per share and has a dividend yield of 1.4%. Markel does not pay a dividend. Allstate pays out 20.6% of its earnings in the form of a dividend. Allstate has raised its dividend for 6 consecutive years.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Allstate and Markel, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Allstate 1 7 4 0 2.25
Markel 0 2 1 0 2.33

Allstate presently has a consensus price target of $94.50, indicating a potential downside of 7.80%. Markel has a consensus price target of $1,066.67, indicating a potential downside of 3.99%. Given Markel’s stronger consensus rating and higher probable upside, analysts clearly believe Markel is more favorable than Allstate.

Risk & Volatility

Allstate has a beta of 1.12, indicating that its share price is 12% more volatile than the S&P 500. Comparatively, Markel has a beta of 1.05, indicating that its share price is 5% more volatile than the S&P 500.

Valuation and Earnings

This table compares Allstate and Markel’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Allstate $36.53 billion 1.01 $1.88 billion $7.20 14.24
Markel $5.61 billion 2.75 $455.68 million $4.50 246.88

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

Profitability

This table compares Allstate and Markel’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Allstate 7.32% 13.11% 2.32%
Markel 1.60% 0.83% 0.27%

Insider and Institutional Ownership

76.3% of Allstate shares are owned by institutional investors. Comparatively, 76.9% of Markel shares are owned by institutional investors. 1.6% of Allstate shares are owned by insiders. Comparatively, 2.5% of Markel shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

Allstate beats Markel on 10 of the 17 factors compared between the two stocks.

About Allstate

The Allstate Corporation (Allstate) is a holding company for Allstate Insurance Company. The Company’s business is conducted principally through Allstate Insurance Company, Allstate Life Insurance Company and other subsidiaries. It is engaged in the property-liability insurance business and the life insurance, retirement and investment products business. Its segments include Allstate Protection, Allstate Financial, Discontinued Lines and Coverages, and Corporate and Other. The Allstate Protection segment sells private passenger auto, homeowners, and other property-liability insurance products through agencies and directly through contact centers and the Internet. The Allstate Financial segment sells life insurance and voluntary accident and health insurance products. The Corporate and Other segment consists of holding company activities and certain non-insurance operations. Its Discontinued Lines and Coverages segment includes results from property-liability insurance coverage.

About Markel

Markel Corporation is a financial holding company serving a range of markets. The Company’s principal business markets and underwrites specialty insurance products. It monitors and reports its ongoing underwriting operations in three segments: U.S. Insurance, International Insurance and Reinsurance. The Company, through its subsidiary Markel Ventures, Inc. (Markel Ventures), owns interests in various industrial and service businesses that operate outside of the specialty insurance marketplace. The U.S. Insurance segment includes all direct business and facultative placements written by its insurance subsidiaries domiciled in the United States. The International Insurance segment includes all direct business and facultative placements written by its insurance subsidiaries domiciled outside of the United States, including its syndicate at Lloyd’s of London (Lloyd’s). The Reinsurance segment includes all treaty reinsurance written across the Company.

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