Root (NASDAQ:ROOT – Get Free Report) and Ambac Financial Group (NYSE:AMBC – Get Free Report) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, valuation, institutional ownership, risk, profitability, analyst recommendations and dividends.
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 |
Risk & Volatility
Root has a beta of 2.7, indicating that its stock price is 170% more volatile than the S&P 500. Comparatively, Ambac Financial Group has a beta of 0.96, indicating that its stock price is 4% less volatile than the S&P 500.
Institutional & Insider 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 insiders. Comparatively, 6.2% of Ambac Financial Group shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
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% |
Analyst Recommendations
This is a summary of current ratings and target prices for Root and Ambac Financial Group, as provided 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 target price of $121.60, suggesting a potential upside of 65.29%. Ambac Financial Group has a consensus target price of $15.00, suggesting a potential upside of 65.93%. Given Ambac Financial Group’s higher possible upside, analysts clearly believe Ambac Financial Group is more favorable than Root.
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.
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