Financial Analysis: MBIA (MBI) versus Assured Guaranty (AGO)
MBIA (NYSE: MBI) and Assured Guaranty (NYSE:AGO) are both property & casualty insurance – nec companies, but which is the superior business? We will contrast the two businesses based on the strength of their profitability, risk, earnings, dividends, valuation, analyst recommendations and institutional ownership.
This table compares MBIA and Assured Guaranty’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Valuation and Earnings
This table compares MBIA and Assured Guaranty’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|MBIA||$294.00 million||2.90||-$338.00 million||($14.51)||-0.64|
|Assured Guaranty||$1.68 billion||2.58||$881.00 million||$6.96||5.29|
Assured Guaranty has higher revenue and earnings than MBIA. MBIA is trading at a lower price-to-earnings ratio than Assured Guaranty, indicating that it is currently the more affordable of the two stocks.
This is a summary of recent recommendations and price targets for MBIA and Assured Guaranty, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
MBIA presently has a consensus target price of $14.50, suggesting a potential upside of 56.25%. Assured Guaranty has a consensus target price of $47.00, suggesting a potential upside of 27.72%. Given MBIA’s stronger consensus rating and higher possible upside, research analysts clearly believe MBIA is more favorable than Assured Guaranty.
Institutional and Insider Ownership
93.4% of MBIA shares are held by institutional investors. Comparatively, 97.2% of Assured Guaranty shares are held by institutional investors. 4.1% of MBIA shares are held by insiders. Comparatively, 2.6% of Assured Guaranty shares are held by 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.
Risk & Volatility
MBIA has a beta of 2.43, meaning that its share price is 143% more volatile than the S&P 500. Comparatively, Assured Guaranty has a beta of 1.66, meaning that its share price is 66% more volatile than the S&P 500.
Assured Guaranty pays an annual dividend of $0.57 per share and has a dividend yield of 1.5%. MBIA does not pay a dividend. Assured Guaranty pays out 8.2% of its earnings in the form of a dividend. MBIA has raised its dividend for 5 consecutive years.
Assured Guaranty beats MBIA on 8 of the 15 factors compared between the two stocks.
MBIA Company Profile
MBIA Inc. is a holding company. The Company, through its subsidiaries, is engaged in the financial guarantee insurance businesses in the industry. The Company manages its business within three segments: United States (U.S.) public finance insurance; corporate, and international and structured finance insurance. The U.S. public finance insurance business is primarily operated through National Public Finance Guarantee Corporation. The corporate segment consists of general corporate activities, including providing general support services, including management, legal, accounting, treasury, information technology, and insurance portfolio surveillance, to other operating businesses, and asset and capital management. The international and structured finance insurance business is primarily operated through MBIA Insurance Corporation and its subsidiaries.
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.
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