Critical Contrast: Radian Group (NYSE:RDN) vs. Ambac Financial Group (NASDAQ:AMBC)

Radian Group (NYSE:RDNGet Rating) and Ambac Financial Group (NASDAQ:AMBCGet Rating) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, dividends, profitability, valuation, institutional ownership, earnings and analyst recommendations.

Profitability

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

Net Margins Return on Equity Return on Assets
Radian Group 63.74% 22.71% 12.29%
Ambac Financial Group 96.15% 35.58% 3.28%

Institutional and Insider Ownership

99.4% of Radian Group shares are owned by institutional investors. Comparatively, 76.1% of Ambac Financial Group shares are owned by institutional investors. 1.4% of Radian Group shares are owned by insiders. Comparatively, 2.7% of Ambac Financial Group shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Volatility & Risk

Radian Group has a beta of 1.19, suggesting that its share price is 19% more volatile than the S&P 500. Comparatively, Ambac Financial Group has a beta of 1.2, suggesting that its share price is 20% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Radian Group and Ambac Financial Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Radian Group 0 2 3 0 2.60
Ambac Financial Group 0 0 0 0 N/A

Radian Group presently has a consensus price target of $24.17, indicating a potential upside of 25.15%. Given Radian Group’s higher probable upside, equities analysts plainly believe Radian Group is more favorable than Ambac Financial Group.

Valuation and Earnings

This table compares Radian Group and Ambac Financial Group’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Radian Group $1.33 billion 2.28 $600.67 million $4.43 4.36
Ambac Financial Group $282.00 million 2.39 -$17.00 million $7.14 2.10

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

Summary

Radian Group beats Ambac Financial Group on 7 of the 13 factors compared between the two stocks.

About Radian Group

(Get Rating)

Radian Group Inc., together with its subsidiaries, engages in the mortgage and real estate services business in the United States. Its Mortgage segment offers credit-related insurance coverage primarily through private mortgage insurance on residential first-lien mortgage loans, as well as other credit risk management, contract underwriting, and fulfillment solutions. This segment primarily serves mortgage originators, such as mortgage banks, commercial banks, savings institutions, credit unions, and community banks. The company's Homegenius segment offers title services, including a suite of insurance and non-insurance title, tax and title data, centralized recording, document retrieval and default curative title services, and deed and property reports, as well as closing and settlement services comprising electronic execution and traditional signing services; real estate valuation products and services; and asset management services, as well as a suite of real estate technology products and services to facilitate real estate transactions, such as software as a service solutions. This segment serves consumers, mortgage lenders, mortgage and real estate investors, government-sponsored enterprises, and real estate brokers and agents. The company was founded in 1977 and is headquartered in Wayne, Pennsylvania.

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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