W.R. Berkley (NYSE:WRB) vs. Marsh & McLennan Companies (NYSE:MRSH) Critical Analysis

Marsh & McLennan Companies (NYSE:MRSH) and W.R. Berkley (NYSE:WRB) are both large-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, earnings, risk, institutional ownership, valuation, analyst recommendations and dividends.

Profitability

This table compares Marsh & McLennan Companies and W.R. Berkley’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Marsh & McLennan Companies	14.24%	32.67%	8.44%
W.R. Berkley	12.94%	19.49%	4.32%

Volatility and Risk

Marsh & McLennan Companies has a beta of 0.61, indicating that its share price is 39% less volatile than the S&P 500. Comparatively, W.R. Berkley has a beta of 0.29, indicating that its share price is 71% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Marsh & McLennan Companies and W.R. Berkley, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Marsh & McLennan Companies	1	11	5	1	2.33
W.R. Berkley	6	9	3	0	1.83

Marsh & McLennan Companies presently has a consensus target price of $201.94, suggesting a potential upside of 5.39%. W.R. Berkley has a consensus target price of $70.94, suggesting a potential downside of 0.72%. Given Marsh & McLennan Companies’ stronger consensus rating and higher probable upside, research analysts plainly believe Marsh & McLennan Companies is more favorable than W.R. Berkley.

Valuation and Earnings

This table compares Marsh & McLennan Companies and W.R. Berkley”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Marsh & McLennan Companies	$27.95 billion	3.27	$4.16 billion	$8.18	23.42
W.R. Berkley	$14.71 billion	1.81	$1.78 billion	$4.87	14.67

Marsh & McLennan Companies has higher revenue and earnings than W.R. Berkley. W.R. Berkley is trading at a lower price-to-earnings ratio than Marsh & McLennan Companies, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

88.0% of Marsh & McLennan Companies shares are owned by institutional investors. Comparatively, 68.8% of W.R. Berkley shares are owned by institutional investors. 0.4% of Marsh & McLennan Companies shares are owned by company insiders. Comparatively, 25.1% of W.R. Berkley shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

Marsh & McLennan Companies pays an annual dividend of $3.96 per share and has a dividend yield of 2.1%. W.R. Berkley pays an annual dividend of $0.40 per share and has a dividend yield of 0.6%. Marsh & McLennan Companies pays out 48.4% of its earnings in the form of a dividend. W.R. Berkley pays out 8.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Marsh & McLennan Companies has increased its dividend for 15 consecutive years and W.R. Berkley has increased its dividend for 23 consecutive years.

Summary

Marsh & McLennan Companies beats W.R. Berkley on 15 of the 18 factors compared between the two stocks.

About Marsh & McLennan Companies

Marsh & McLennan Cos., Inc. is a professional services firm, which engages in offering clients advice and solutions in risk, strategy, and people. It operates through the Risk and Insurance Services, and Consulting segments. The Risk and Insurance Services segment is involved in risk management activities, as well as insurance and reinsurance broking and services. The Consulting segment offers health, wealth, and career solutions and products, and specialized management, strategic, economic, and brand consulting services. The company was founded by Henry W. Marsh and Donald R. McLennan in 1871 and is headquartered in New York, NY.

About W.R. Berkley

W. R. Berkley Corporation, an insurance holding company, operates as a commercial lines writers worldwide. It operates in two segments, Insurance and Reinsurance & Monoline Excess. The Insurance segment underwrites commercial insurance business, including excess and surplus lines, admitted lines, and specialty personal lines. This segment also provides accident and health insurance and reinsurance products; insurance for commercial risks; casualty and specialty environmental products; specialized insurance coverages for fine arts and jewelry exposures; excess liability and inland marine coverage for small to medium-sized insureds; and commercial general liability, umbrella, professional liability, directors and officers, commercial property, and surety products, as well as products for technology, and life sciences and travel industries. In addition, this segment offers cyber risk solutions; crime and fidelity insurance products; medical professional coverages; workers' compensation insurance products; general insurance; personal lines insurance solutions, including home, condo/co-op, auto, and collectibles; automobile, law enforcement, public officials and educator's legal, and employment practices liability, as well as incidental medical and property and crime insurance products; at-risk and alternative risk insurance program management services; professional liability; energy and marine risks; and provides insurance products to the Lloyd's marketplace. The Reinsurance & Monoline Excess segment provides treaty and facultative reinsurance solutions; property and casualty reinsurance; facultative reinsurance products include automatic, semi-automatic and individual risk assumed reinsurance; and turnkey products such as cyber, employment practices liability insurance, liquor liability insurance and violent events. The company was founded in 1967 and is headquartered in Greenwich, Connecticut.