MGIC Investment Corporation (NYSE: MTG) and Hilltop Holdings (NYSE:HTH) are both mid-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their analyst recommendations, profitabiliy, earnings, dividends, valuation, risk and institutional ownership.

Insider & Institutional Ownership

86.1% of MGIC Investment Corporation shares are owned by institutional investors. Comparatively, 55.8% of Hilltop Holdings shares are owned by institutional investors. 1.0% of MGIC Investment Corporation shares are owned by company insiders. Comparatively, 22.5% of Hilltop Holdings shares are owned by company 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.

Risk & Volatility

MGIC Investment Corporation has a beta of 2.1, meaning that its share price is 110% more volatile than the S&P 500. Comparatively, Hilltop Holdings has a beta of 1, meaning that its share price has a similar volatility profile to the S&P 500.

Profitability

This table compares MGIC Investment Corporation and Hilltop Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MGIC Investment Corporation 34.10% 17.00% 7.52%
Hilltop Holdings 8.33% 7.81% 1.14%

Dividends

Hilltop Holdings pays an annual dividend of $0.24 per share and has a dividend yield of 0.9%. MGIC Investment Corporation does not pay a dividend. Hilltop Holdings pays out 16.2% of its earnings in the form of a dividend.

Earnings and Valuation

This table compares MGIC Investment Corporation and Hilltop Holdings’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
MGIC Investment Corporation $1.06 billion 3.90 $784.67 million $0.92 12.14
Hilltop Holdings $1.64 billion 1.59 $145.82 million $1.48 17.85

MGIC Investment Corporation has higher revenue, but lower earnings than Hilltop Holdings. MGIC Investment Corporation is trading at a lower price-to-earnings ratio than Hilltop Holdings, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current recommendations for MGIC Investment Corporation and Hilltop Holdings, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MGIC Investment Corporation 0 1 8 0 2.89
Hilltop Holdings 0 3 0 0 2.00

MGIC Investment Corporation currently has a consensus target price of $11.50, indicating a potential upside of 2.95%. Hilltop Holdings has a consensus target price of $28.63, indicating a potential upside of 8.35%. Given Hilltop Holdings’ higher possible upside, analysts plainly believe Hilltop Holdings is more favorable than MGIC Investment Corporation.

Summary

MGIC Investment Corporation beats Hilltop Holdings on 10 of the 16 factors compared between the two stocks.

About MGIC Investment Corporation

MGIC Investment Corporation is a holding company. The Company, through its subsidiaries, provides private mortgage insurance and ancillary services. The Company provides mortgage insurance to lenders throughout the United States and to government-sponsored entities to protect against loss from defaults on low down payment residential mortgage loans. Its principal product is primary mortgage insurance. Primary insurance provides mortgage default protection on individual loans and covers unpaid loan principal, delinquent interest and certain expenses associated with the default and subsequent foreclosure or sale approved by the Company. Through certain other non-insurance subsidiaries, the Company also provides various services for the mortgage finance industry, such as contract underwriting, analysis of loan originations and portfolios, and mortgage lead generation. The Company’s subsidiaries include Mortgage Guaranty Insurance Corporation (MGIC) and MGIC Indemnity Corporation (MIC).

About Hilltop Holdings

Hilltop Holdings Inc. is a financial holding Company. The Company provides business and consumer banking services from offices located throughout Texas through PlainsCapital Bank (the Bank). It has three operating business units, which include PlainsCapital Corporation (PCC) (banking and mortgage origination), Hilltop Securities Holdings LLC (Securities Holdings) (broker-dealer) and PlainsCapital Company (NLC) (insurance). The PCC unit includes the Bank, and its subsidiary, PrimeLending (collectively referred to herein as PlainsCapital), while the Securities Holdings unit includes its broker-dealer operations transferred from the PCC unit, and two entities acquired in the SWS Group, Inc. (SWS) Merger, Hilltop Securities Inc. (Hilltop Securities) and Hilltop Securities Independent Network Inc. (HTS Independent Network). Its segments include Banking, Broker-Dealer, mortgage origination, insurance and Corporate.

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