Assured Guaranty (NYSE: AGO) and Old Republic International Corporation (NYSE:ORI) are both mid-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, profitability, dividends, valuation, analyst recommendations, risk and earnings.

Institutional and Insider Ownership

97.2% of Assured Guaranty shares are held by institutional investors. Comparatively, 70.1% of Old Republic International Corporation shares are held by institutional investors. 2.6% of Assured Guaranty shares are held by insiders. Comparatively, 2.3% of Old Republic International Corporation shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Assured Guaranty and Old Republic International Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Assured Guaranty 45.38% 10.59% 4.88%
Old Republic International Corporation 6.45% 7.50% 1.81%

Analyst Ratings

This is a breakdown of current recommendations and price targets for Assured Guaranty and Old Republic International Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Assured Guaranty 0 1 2 0 2.67
Old Republic International Corporation 0 0 0 1 4.00

Assured Guaranty presently has a consensus target price of $47.00, indicating a potential upside of 30.48%. Old Republic International Corporation has a consensus target price of $25.00, indicating a potential upside of 21.01%. Given Assured Guaranty’s higher possible upside, research analysts plainly believe Assured Guaranty is more favorable than Old Republic International Corporation.

Dividends

Assured Guaranty pays an annual dividend of $0.57 per share and has a dividend yield of 1.6%. Old Republic International Corporation pays an annual dividend of $0.76 per share and has a dividend yield of 3.7%. Assured Guaranty pays out 8.2% of its earnings in the form of a dividend. Old Republic International Corporation pays out 55.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Assured Guaranty has raised its dividend for 35 consecutive years and Old Republic International Corporation has raised its dividend for 5 consecutive years.

Volatility & Risk

Assured Guaranty has a beta of 1.66, indicating that its stock price is 66% more volatile than the S&P 500. Comparatively, Old Republic International Corporation has a beta of 1.36, indicating that its stock price is 36% more volatile than the S&P 500.

Valuation and Earnings

This table compares Assured Guaranty and Old Republic International Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Assured Guaranty $1.68 billion 2.52 $881.00 million $6.94 5.19
Old Republic International Corporation $5.90 billion 0.92 $467.00 million $1.37 15.08

Assured Guaranty has higher revenue, but lower earnings than Old Republic International Corporation. Assured Guaranty is trading at a lower price-to-earnings ratio than Old Republic International Corporation, indicating that it is currently the more affordable of the two stocks.

Summary

Assured Guaranty beats Old Republic International Corporation on 13 of the 18 factors compared between the two stocks.

Assured Guaranty Company Profile

Assured Guaranty Ltd. is a holding company. The Company, through its subsidiaries, provides credit protection products to the United States and international public finance, including infrastructure, and structured finance markets. It applies its credit underwriting judgment, risk management skills and capital markets experience primarily to offer financial guaranty insurance that protects holders of debt instruments and other monetary obligations from defaults in scheduled payments. It markets its financial guaranty insurance directly to issuers and underwriters of public finance and structured finance securities, as well as to investors in such obligations. It guarantees obligations issued principally in the United States and the United Kingdom and also guarantees obligations issued in other countries and regions, including Australia and Western Europe. It also provides other forms of insurance that are in line with its risk profile and benefit from its underwriting experience.

Old Republic International Corporation Company Profile

Old Republic International Corporation is a holding company. The Company is engaged in business of insurance underwriting and related services. The Company conducts its operations through various regulated insurance company subsidiaries, which are organized into three segments: General Insurance Group, Title Insurance Group and the Republic Financial Indemnity Group (RFIG) Run-off Business. The Company’s General Insurance segment consists of property and liability insurance, and offers coverages to businesses, government and other institutions. The Company’s Title Insurance Group business consists of the issuance of policies to real estate purchasers and investors based upon searches of the public records, which contain information concerning interests in real property. The Company’s RFIG run-off business consists of its mortgage guaranty and consumer credit indemnity (CCI) operations.

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