Critical Review: American Financial Group (NYSE:AFG) and Majestic Capital (OTCMKTS:MAJCQ)

Majestic Capital (OTCMKTS:MAJCQ) and American Financial Group (NYSE:AFG) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, earnings, risk, profitability, valuation and dividends.

Profitability

This table compares Majestic Capital and American Financial Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Majestic Capital	N/A	N/A	N/A
American Financial Group	11.03%	21.34%	2.94%

Earnings and Valuation

This table compares Majestic Capital and American Financial Group’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Majestic Capital	N/A	N/A	N/A	N/A	N/A
American Financial Group	$7.83 billion	1.32	$852.00 million	$10.45	11.77

American Financial Group has higher revenue and earnings than Majestic Capital.

Institutional and Insider Ownership

64.4% of American Financial Group shares are held by institutional investors. 14.3% of Majestic Capital shares are held by insiders. Comparatively, 14.5% of American Financial Group shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of recent recommendations and price targets for Majestic Capital and American Financial Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Majestic Capital	0	0	0	0	N/A
American Financial Group	0	3	1	0	2.25

American Financial Group has a consensus target price of $131.75, suggesting a potential upside of 7.10%. Given American Financial Group’s higher possible upside, analysts plainly believe American Financial Group is more favorable than Majestic Capital.

Summary

American Financial Group beats Majestic Capital on 8 of the 8 factors compared between the two stocks.

About Majestic Capital

Majestic Capital, Ltd., through its subsidiaries, provides workers' compensation insurance products. The company underwrites workers' compensation insurance products through independent insurance brokers and agents to various size businesses; and excess and frequency coverage policies to self-insured entities. It offers primary workers' compensation insurance to employers in Alaska, Arizona, California, Florida, Hawaii, Idaho, Illinois, Montana, Nevada, New Jersey, New Mexico, New York, Oregon, Utah, Virginia, and Washington. The company also engages in underwriting reinsurance. In addition, it offers various management services, including general management, underwriting, risk assessment, general recordkeeping, and regulatory compliance services; safety and loss control services; and claims management services to self-insured groups under fee-for-service arrangements. Further, the company acts as a broker for insurers and places the excess coverage for the groups. It serves transportation, healthcare, wholesale and retail, manufacturing, and hospitality industries; contractors; and colleges and universities. Majestic Capital, Ltd. was formerly known as CRM Holdings, Ltd. and changed its name to Majestic Capital, Ltd. in May 2010. Majestic Capital, Ltd. was founded in 1999 and is based in Hamilton, Bermuda.

About American Financial Group

American Financial Group, Inc., an insurance holding company, provides specialty property and casualty insurance products in the United States. The company offers property and transportation insurance products, such as physical damage and liability coverage for buses and trucks, inland and ocean marine, agricultural-related products, and other commercial property and specialty transportation coverages; specialty casualty insurance, including primarily excess and surplus, executive and professional liability, general liability, umbrella and excess liability, and specialty coverage in targeted markets, as well as customized programs for small to mid-sized businesses and workers' compensation insurance; and specialty financial insurance products comprising risk management insurance programs for lending and leasing institutions, fidelity and surety products, and trade credit insurance. It sells its property and casualty insurance products through independent insurance agents and brokers. The company was founded in 1872 and is headquartered in Cincinnati, Ohio.