Contrasting Ambac Financial Group (AMBC) & MGIC Investment (MTG)

Ambac Financial Group (NASDAQ: AMBC) and MGIC Investment (NYSE:MTG) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, valuation, institutional ownership, earnings, analyst recommendations, risk and profitability.

Analyst Ratings

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This is a breakdown of recent ratings and target prices for Ambac Financial Group and MGIC Investment, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ambac Financial Group 0 1 1 0 2.50
MGIC Investment 0 0 12 0 3.00

Ambac Financial Group presently has a consensus target price of $23.50, suggesting a potential upside of 45.06%. MGIC Investment has a consensus target price of $16.57, suggesting a potential upside of 29.24%. Given Ambac Financial Group’s higher probable upside, research analysts plainly believe Ambac Financial Group is more favorable than MGIC Investment.

Earnings and Valuation

This table compares Ambac Financial Group and MGIC Investment’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ambac Financial Group $621.25 million 1.18 -$328.71 million N/A N/A
MGIC Investment $1.07 billion 4.46 $355.76 million $1.36 9.43

MGIC Investment has higher revenue and earnings than Ambac Financial Group.

Profitability

This table compares Ambac Financial Group and MGIC Investment’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ambac Financial Group -52.91% -9.12% -0.72%
MGIC Investment 33.37% 17.36% 9.08%

Risk and Volatility

Ambac Financial Group has a beta of 1.7, suggesting that its stock price is 70% more volatile than the S&P 500. Comparatively, MGIC Investment has a beta of 1.95, suggesting that its stock price is 95% more volatile than the S&P 500.

Institutional & Insider Ownership

75.2% of Ambac Financial Group shares are owned by institutional investors. Comparatively, 92.8% of MGIC Investment shares are owned by institutional investors. 1.0% of Ambac Financial Group shares are owned by insiders. Comparatively, 1.0% of MGIC Investment shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

MGIC Investment beats Ambac Financial Group on 11 of the 12 factors compared between the two stocks.

About Ambac Financial Group

Ambac Financial Group, Inc., a financial services holding company, provides financial guarantees and other financial services to clients in both the public and private sectors worldwide. It operates through two segments, Financial Guarantee and Financial Services. The Financial Guarantee segment provides financial guarantees, including insurance policies and credit derivative contracts for public finance, structured finance, and international obligations. The Financial Services segment offers investment agreements, funding conduits, and interest rate swaps, principally to clients of the financial guarantee business. The company was founded in 1971 and is headquartered in New York, New York.

About MGIC Investment

MGIC Investment Corporation is a holding company. The Company, through its subsidiaries, provides private mortgage insurance and ancillary services. The Company provides mortgage insurance to lenders throughout the United States and to government-sponsored entities to protect against loss from defaults on low down payment residential mortgage loans. Its principal product is primary mortgage insurance. Primary insurance provides mortgage default protection on individual loans and covers unpaid loan principal, delinquent interest and certain expenses associated with the default and subsequent foreclosure or sale approved by the Company. Through certain other non-insurance subsidiaries, the Company also provides various services for the mortgage finance industry, such as contract underwriting, analysis of loan originations and portfolios, and mortgage lead generation. The Company’s subsidiaries include Mortgage Guaranty Insurance Corporation (MGIC) and MGIC Indemnity Corporation (MIC).

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