First American Financial (NYSE:FAF) and Tokio Marine (OTCMKTS:TKOMY) Head to Head Review

First American Financial (NYSE:FAF) and Tokio Marine (OTCMKTS:TKOMY) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, dividends, analyst recommendations, profitability, institutional ownership and valuation.

Insider & Institutional Ownership

89.1% of First American Financial shares are held by institutional investors. 3.7% of First American Financial shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Earnings and Valuation

This table compares First American Financial and Tokio Marine”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First American Financial	$6.51 billion	1.06	$131.10 million	$1.81	37.33
Tokio Marine	$55.42 billion	1.53	$6.96 billion	$3.64	12.03

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

Profitability

This table compares First American Financial and Tokio Marine’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First American Financial	2.90%	10.41%	3.33%
Tokio Marine	13.45%	22.49%	3.69%

Dividends

First American Financial pays an annual dividend of $2.20 per share and has a dividend yield of 3.3%. Tokio Marine pays an annual dividend of $1.10 per share and has a dividend yield of 2.5%. First American Financial pays out 121.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Tokio Marine pays out 30.2% of its earnings in the form of a dividend. First American Financial has increased its dividend for 15 consecutive years. First American Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

First American Financial has a beta of 1.27, indicating that its share price is 27% more volatile than the S&P 500. Comparatively, Tokio Marine has a beta of 0.27, indicating that its share price is 73% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and target prices for First American Financial and Tokio Marine, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First American Financial	0	1	3	0	2.75
Tokio Marine	1	1	0	0	1.50

First American Financial presently has a consensus target price of $75.00, indicating a potential upside of 11.00%. Given First American Financial’s stronger consensus rating and higher possible upside, research analysts clearly believe First American Financial is more favorable than Tokio Marine.

Summary

First American Financial beats Tokio Marine on 9 of the 17 factors compared between the two stocks.

About First American Financial

First American Financial Corporation, through its subsidiaries, provides financial services. It operates through Title Insurance and Services, and Home Warranty segments. The Title Insurance and Services segment issues title insurance policies on residential and commercial property, as well as offers related products and services internationally. This segment also provides closing and/or escrow services; products, services, and solutions to mitigate risk or otherwise facilitate real estate transactions; and appraisals and other valuation-related products and services, lien release and document custodial services, warehouse lending services, default-related products and services, document generation services, mortgage loans subservicing, and related products and services, as well as banking, trust, and wealth management services. In addition, it accommodates tax-deferred exchanges of real estate; and maintains, manages, and provides access to title plant data and records. This segment offers its products through a network of direct operations and agents in various states and in the District of Columbia, as well as in Canada, the United Kingdom, Australia, New Zealand, South Korea, and internationally. The Home Warranty segment provides home warranty products, including residential service contracts that cover residential systems, such as heating and air conditioning systems, and various appliances against failures that occur as the result of normal usage during the coverage period. This segment operates in various states and the District of Columbia. The company was founded in 1889 and is headquartered in Santa Ana, California.

About Tokio Marine

Tokio Marine Holdings, Inc., together with its subsidiaries, engages in non-life and life insurance, international insurance, and financial and general businesses worldwide. The company provides business, fire, Internet and mobile, rental housing, and natural catastrophe risk insurance services, as well as insurance for retail and corporate fields. It also provides property investment, insurance agency and risk consulting, human resource, in-home care and nursing care information, healthcare/medical, call center, and real estate-related services. Tokio Marine Holdings, Inc. serves individuals, small to medium sized non-profit organizations, schools, or churches. The company was formerly known as Millea Holdings, Inc. and changed its name to Tokio Marine Holdings, Inc. in 2008. Tokio Marine Holdings, Inc. was founded in 1879 and is headquartered in Tokyo, Japan.