Critical Comparison: MBIA (NYSE:MBI) and Ambac Financial Group (NASDAQ:AMBC)

MBIA (NYSE:MBIGet Rating) and Ambac Financial Group (NASDAQ:AMBCGet Rating) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, institutional ownership, analyst recommendations, profitability, earnings, dividends and risk.

Risk and Volatility

MBIA has a beta of 1.23, meaning that its stock price is 23% more volatile than the S&P 500. Comparatively, Ambac Financial Group has a beta of 1.2, meaning that its stock price is 20% more volatile than the S&P 500.

Earnings & Valuation

This table compares MBIA and Ambac Financial Group’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
MBIA $189.00 million 3.38 -$445.00 million ($5.99) -1.94
Ambac Financial Group $282.00 million 2.39 -$17.00 million $7.14 2.10

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

Profitability

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

Net Margins Return on Equity Return on Assets
MBIA -240.32% N/A -6.18%
Ambac Financial Group 96.15% 35.58% 3.28%

Institutional & Insider Ownership

65.7% of MBIA shares are owned by institutional investors. Comparatively, 76.1% of Ambac Financial Group shares are owned by institutional investors. 12.6% of MBIA shares are owned by company insiders. Comparatively, 2.7% of Ambac Financial Group shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and price targets for MBIA and Ambac Financial Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MBIA 0 0 0 0 N/A
Ambac Financial Group 0 0 0 0 N/A

MBIA currently has a consensus price target of $13.00, indicating a potential upside of 11.59%. Given MBIA’s higher probable upside, research analysts plainly believe MBIA is more favorable than Ambac Financial Group.

Summary

Ambac Financial Group beats MBIA on 8 of the 12 factors compared between the two stocks.

About MBIA

(Get Rating)

MBIA Inc. provides financial guarantee insurance services to public finance markets. It operates through United States (U.S.) Public Finance Insurance, and International and Structured Finance Insurance segments. The company issues financial guarantees for municipal bonds, including tax-exempt and taxable indebtedness of the U.S. political subdivisions and territories, as well as utilities, airports, health care institutions, higher educational facilities, student loan issuers, housing authorities, and other similar agencies and obligations issued by private entities. It also insures the non-U.S. public finance and global structured finance, including asset-backed obligations; and sovereign-related and sub-sovereign bonds, utilities, and privately issued bonds used for the financing of projects that include toll roads, bridges, airports, public transportation facilities, and other types of infrastructure projects, as well as offers third-party reinsurance services. MBIA Inc. was founded in 1973 and is headquartered in Purchase, New York.

About Ambac Financial Group

(Get Rating)

Ambac Financial Group, Inc., a financial services holding company, provides financial guarantees in the United States, the United Kingdom, Italy, Austria, Australia, France, and Internationally. It offers financial guarantee insurance policies; specialty property & casualty program insurance; credit derivative contracts; and interest rate derivative transactions, as well as managing general agency / underwriting services. The company was incorporated in 1991 and is headquartered in New York, New York.

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