Octave Specialty Group (NYSE:OSG) and Sompo (OTCMKTS:SMPNY) Critical Review

Sompo (OTCMKTS:SMPNY) and Octave Specialty Group (NYSE:OSG) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, valuation, earnings, analyst recommendations, profitability, risk and dividends.

Risk and Volatility

Sompo has a beta of 0.29, suggesting that its stock price is 71% less volatile than the S&P 500. Comparatively, Octave Specialty Group has a beta of 0.87, suggesting that its stock price is 13% less volatile than the S&P 500.

Profitability

This table compares Sompo and Octave Specialty Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sompo	12.35%	13.62%	3.96%
Octave Specialty Group	-51.10%	0.44%	0.17%

Analyst Recommendations

This is a summary of current ratings and recommmendations for Sompo and Octave Specialty Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sompo	0	1	0	0	2.00
Octave Specialty Group	2	1	2	0	2.00

Octave Specialty Group has a consensus target price of $11.50, indicating a potential upside of 150.82%. Given Octave Specialty Group’s higher probable upside, analysts clearly believe Octave Specialty Group is more favorable than Sompo.

Valuation & Earnings

This table compares Sompo and Octave Specialty Group”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sompo	$35.69 billion	1.11	$4.22 billion	$2.54	8.37
Octave Specialty Group	$251.22 million	0.82	-$261.69 million	($3.65)	-1.26

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

Insider & Institutional Ownership

80.9% of Octave Specialty Group shares are held by institutional investors. 7.2% of Octave Specialty Group shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

Sompo beats Octave Specialty Group on 7 of the 13 factors compared between the two stocks.

About Sompo

Sompo Holdings, Inc. provides property and casualty (P&C) insurance services in Japan and internationally. The company operates through Domestic P&C Insurance Business, Overseas Insurance Business, Domestic Life Insurance Business, and Nursing Care & Seniors Business segments. It offers various P&C insurance products, including automobile, fire, personal accident, and marine, as well as security, risk management, assistance, and warranty services; and life insurance products. The company also provides nursing care and seniors services; and customer security, health, and wellbeing support services. In addition, it offers asset management services; home remodeling services; and health support services comprising health guidance and employee assistance programs. The company was formerly known as Sompo Japan Nipponkoa Holdings, Inc. and changed its name to Sompo Holdings, Inc. in October 2016. The company was incorporated in 2010 and is headquartered in Tokyo, Japan.

About Octave Specialty 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.