Root (NASDAQ:ROOT – Get Rating) and American International Group (NYSE:AIG – Get Rating) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, analyst recommendations, institutional ownership, earnings, dividends and risk.
Insider & Institutional Ownership
52.0% of Root shares are owned by institutional investors. Comparatively, 92.6% of American International Group shares are owned by institutional investors. 27.6% of Root shares are owned by company insiders. Comparatively, 0.3% of American International Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Risk and Volatility
Root has a beta of -0.18, indicating that its share price is 118% less volatile than the S&P 500. Comparatively, American International Group has a beta of 1.19, indicating that its share price is 19% more volatile than the S&P 500.
Profitability
This table compares Root and American International Group’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Root | -115.99% | -80.67% | -27.81% |
| American International Group | 22.23% | 7.12% | 0.73% |
Analyst Recommendations
This is a breakdown of current recommendations for Root and American International Group, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Root | 1 | 6 | 1 | 0 | 2.00 |
| American International Group | 0 | 4 | 3 | 0 | 2.43 |
Root presently has a consensus price target of $3.67, suggesting a potential upside of 286.20%. American International Group has a consensus price target of $65.57, suggesting a potential upside of 14.22%. Given Root’s higher probable upside, equities research analysts plainly believe Root is more favorable than American International Group.
Valuation and Earnings
This table compares Root and American International Group’s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Root | $345.40 million | 0.70 | -$521.10 million | ($1.63) | -0.58 |
| American International Group | $52.06 billion | 0.84 | $9.39 billion | $15.23 | 3.77 |
American International Group has higher revenue and earnings than Root. Root is trading at a lower price-to-earnings ratio than American International Group, indicating that it is currently the more affordable of the two stocks.
Summary
American International Group beats Root on 12 of the 14 factors compared between the two stocks.
About Root
(Get Rating)
Root, Inc. provides insurance products and services in the United States. The company offers automobile, homeowners, and renters insurance products. The company operates a direct-to-consumer model and serves customers primarily through mobile applications, as well as through its website. Its direct distribution channels also cover digital, media, and referral channels, as well as distribution partners and agencies. The company was incorporated in 2015 and is headquartered in Columbus, Ohio.
About American International Group
(Get Rating)
American International Group, Inc. offers insurance products for commercial, institutional, and individual customers in North America and internationally. The company’s General Insurance segment provides general liability, environmental, commercial automobile liability, workers’ compensation, casualty, and crisis management insurance products; commercial, industrial, and energy-related property insurance; and aerospace, political risk, trade credit, portfolio solutions, crop, and marine insurance. It also provides professional liability insurance products for a range of businesses and risks, including directors and officers, mergers and acquisitions, fidelity, employment practices, fiduciary liability, cyber risk, kidnap and ransom, and errors and omissions insurance. In addition, this segment offers personal auto and property insurance, such as auto, homeowners, umbrella, yacht, fine art, and collections; voluntary and sponsor-paid personal accident; supplemental health products; extended warranty insurance products; and travel insurance products. Its Life and Retirement segment offers variable annuities, index and fixed annuities, and retail mutual funds; and financial planning and advisory services; record-keeping, plan administrative, and compliance services; and term life and universal life insurance. It also provides stable value wrap products, and structured settlement and pension risk transfer annuities; and corporate- and bank-owned life insurance and guaranteed investment contracts. This segment sells its products through independent marketing organizations, independent insurance agents, financial advisors, direct marketing, banks, and broker-dealers. The company was founded in 1919 and is headquartered in New York, New York.
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