Head-To-Head Comparison: Ambac Financial Group (NYSE:AMBC) and Root (NASDAQ:ROOT)

Root (NASDAQ:ROOT) and Ambac Financial Group (NYSE:AMBC) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their risk, analyst recommendations, earnings, profitability, institutional ownership, dividends and valuation.

Valuation & Earnings

This table compares Root and Ambac Financial Group”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Root	$1.18 billion	0.97	$30.90 million	$3.31	22.23
Ambac Financial Group	$249.54 million	1.59	-$556.45 million	($15.34)	-0.59

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

Analyst Ratings

This is a summary of current ratings and recommmendations for Root and Ambac Financial Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Root	1	5	2	0	2.13
Ambac Financial Group	1	0	1	0	2.00

Root presently has a consensus price target of $121.60, indicating a potential upside of 65.29%. Ambac Financial Group has a consensus price target of $15.00, indicating a potential upside of 65.93%. Given Ambac Financial Group’s higher possible upside, analysts plainly believe Ambac Financial Group is more favorable than Root.

Insider & Institutional Ownership

59.8% of Root shares are held by institutional investors. Comparatively, 84.5% of Ambac Financial Group shares are held by institutional investors. 11.7% of Root shares are held by company insiders. Comparatively, 6.2% of Ambac Financial Group shares are held by company 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 Root and Ambac Financial Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Root	3.80%	23.36%	3.49%
Ambac Financial Group	-215.40%	-3.50%	-0.49%

Risk and Volatility

Root has a beta of 2.7, suggesting that its stock price is 170% more volatile than the S&P 500. Comparatively, Ambac Financial Group has a beta of 0.96, suggesting that its stock price is 4% less volatile than the S&P 500.

Summary

Root beats Ambac Financial Group on 11 of the 14 factors compared between the two stocks.

About Root

Root, Inc. provides insurance products and services in the United States. The company offers automobile, homeowners, and renters insurance products. It operates a direct-to-consumer model; and serves customers primarily through mobile applications, as well as through its website. The company's direct distribution channels also cover digital, media, and referral channels, as well as distribution partners and agencies. Root, Inc. was incorporated in 2015 and is headquartered in Columbus, Ohio.

About Ambac Financial Group

Ambac Financial Group, Inc. operates as a financial services holding company. It operates three businesses: Specialty Property and Casualty Insurance, Insurance Distribution, and Legacy Financial Guarantee (LFG) Insurance. The Specialty Property and Casualty Insurance business provides specialty property and casualty program insurance with a focus commercial and personal liability risks. The Insurance Distribution business includes the specialty property and casualty insurance distribution business, which includes managing general agents and underwriters, insurance wholesalers, brokers, and other distribution businesses. The LFG Insurance business offers financial guarantee insurance policies that provide an unconditional and irrevocable guarantee, which protects the holder of a debt obligation against non-payment when due of the principal and interest on the obligations guaranteed. Ambac Financial Group, Inc. was incorporated in 1991 and is headquartered in New York, New York.