Critical Contrast: Alleghany (Y) and Allstate (NYSE:ALL)

Alleghany (NYSE:Y) and Allstate (NYSE:ALL) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, profitability, dividends, analyst recommendations, valuation and institutional ownership.

Insider & Institutional Ownership

82.0% of Alleghany shares are held by institutional investors. Comparatively, 77.5% of Allstate shares are held by institutional investors. 3.4% of Alleghany shares are held by insiders. Comparatively, 1.6% of Allstate shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
Alleghany 4.04% 2.53% 0.82%
Allstate 6.26% 12.66% 2.31%

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Alleghany $6.89 billion 1.39 $39.53 million $16.13 41.12
Allstate $39.82 billion 0.80 $2.25 billion $8.07 11.84

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

Dividends

Allstate pays an annual dividend of $2.00 per share and has a dividend yield of 2.1%. Alleghany does not pay a dividend. Allstate pays out 24.8% of its earnings in the form of a dividend. Allstate has increased its dividend for 8 consecutive years.

Volatility and Risk

Alleghany has a beta of 0.77, suggesting that its stock price is 23% less volatile than the S&P 500. Comparatively, Allstate has a beta of 0.83, suggesting that its stock price is 17% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for Alleghany and Allstate, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alleghany 0 2 2 0 2.50
Allstate 0 8 5 0 2.38

Alleghany presently has a consensus target price of $700.00, indicating a potential upside of 5.53%. Allstate has a consensus target price of $102.64, indicating a potential upside of 7.46%. Given Allstate’s higher possible upside, analysts clearly believe Allstate is more favorable than Alleghany.

Summary

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

Alleghany Company Profile

Alleghany Corporation provides property and casualty reinsurance and insurance products in the United States and internationally. The company operates in three segments: Reinsurance, Insurance, and Alleghany Capital. The Reinsurance segment offers fire, allied lines, auto physical damage, and homeowners multiple peril reinsurance products; and casualty and other reinsurance products, such as medical malpractice, ocean marine and aviation, accident and health, mortgage, surety, and credit reinsurance products, as well as directors' and officers', errors and omissions, general, and auto liability reinsurance. It distributes its products and services through brokers, as well as directly to insurance and reinsurance companies. The Insurance segment underwrites specialty insurance coverages in the property, as well as umbrella/excess, general, management, and professional liability lines; surety products comprising commercial and contract surety bonds; and workers' compensation insurance products. It distributes its products through independent wholesale insurance brokers, and retail and general insurance agents. The Alleghany Capital segment manufacturer/remanufacturer of specialty machine tools, as well as custom trailers and truck bodies for the moving and storage industry, and other markets; and operates as a toy, and entertainment and musical instrument company. It also provides technical engineering services for pharmaceutical and biotechnology industries; products and services for the funeral and cemetery industries, and precast concrete markets; and hotel management and development services, as well as operates as a structural steel fabricator and erector. The company also explores for and produces oil; and owns and manages improved and unimproved commercial land, and residential lots. As of December 31, 2018, it owned approximately 125 acres of property. Alleghany Corporation was founded in 1929 and is based in New York, New York.

Allstate Company Profile

The Allstate Corporation, through its subsidiaries, provides property and casualty, and other insurance products in the United States and Canada. The company operates through Allstate Protection, Service Businesses, Allstate Life, and Allstate Benefits segments. The Allstate Protection segment offers private passenger auto and homeowners insurance; specialty auto products, including motorcycle, trailer, motor home, and off-road vehicle insurance; other personal lines products, such as renter, condominium, landlord, boat, umbrella, and manufactured home insurance; and commercial lines products under the Allstate, Esurance, and Encompass brand names. The Service Businesses segment provides consumer electronics and appliance protection plans covering TVs, smartphones, and computers; device and mobile data collection services, analytics and customer risk assessment solutions, and telematics services; roadside assistance services, such as towing, jump-start, lockout, fuel delivery, and tire change services; and vehicle service contracts, guaranteed asset protection waivers, road hazard tire and wheel protection, and paintless dent repair protection services under the SquareTrade, Arity, Allstate Roadside Services, and Allstate Dealer Services brands. The Allstate Life Segment offers term, whole, interest-sensitive, and variable life insurance products, as well as non-proprietary retirement product solutions offered by third-party providers. Its Allstate Benefits segment provides life, accident, critical illness, short-term disability, and other health insurance products. The company sells its products through agencies, as well as directly through contact centers and Internet; and financial specialists, brokers, relationships with wholesale partners, and affinity groups. The Allstate Corporation was founded in 1931 and is headquartered in Northbrook, Illinois.

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