MBIA (NYSE: MBI) and American Financial Group (NYSE:AFG) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, analyst recommendations, dividends, institutional ownership, valuation, earnings and profitability.
This table compares MBIA and American Financial Group’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|American Financial Group||6.92%||11.09%||0.99%|
This is a summary of current ratings and price targets for MBIA and American Financial Group, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|American Financial Group||0||1||2||0||2.67|
MBIA presently has a consensus target price of $14.50, suggesting a potential upside of 67.82%. American Financial Group has a consensus target price of $114.67, suggesting a potential upside of 1.01%. Given MBIA’s higher probable upside, research analysts plainly believe MBIA is more favorable than American Financial Group.
American Financial Group pays an annual dividend of $1.40 per share and has a dividend yield of 1.2%. MBIA does not pay a dividend. American Financial Group pays out 26.4% of its earnings in the form of a dividend. American Financial Group has raised its dividend for 12 consecutive years.
Insider & Institutional Ownership
62.3% of American Financial Group shares are held by institutional investors. 4.1% of MBIA shares are held by company insiders. Comparatively, 13.7% of American Financial Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Risk and Volatility
MBIA has a beta of 2.15, suggesting that its share price is 115% more volatile than the S&P 500. Comparatively, American Financial Group has a beta of 0.8, suggesting that its share price is 20% less volatile than the S&P 500.
Earnings & Valuation
This table compares MBIA and American Financial Group’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|MBIA||$433.00 million||1.77||-$1.61 billion||($12.89)||-0.67|
|American Financial Group||$6.87 billion||1.46||$475.00 million||$5.30||21.42|
American Financial Group has higher revenue and earnings than MBIA. MBIA is trading at a lower price-to-earnings ratio than American Financial Group, indicating that it is currently the more affordable of the two stocks.
American Financial Group beats MBIA on 10 of the 14 factors compared between the two stocks.
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.
About American Financial Group
American Financial Group, Inc. (AFG) is a holding company engaged primarily in property and casualty insurance businesses. The Company, through Great American Insurance Group, focuses on commercial products for businesses, and is engaged in the sale of fixed and fixed-indexed annuities in the retail, financial institutions and education markets. It has four segments: Property and casualty insurance, Annuity, Run-off long-term care and life, and Other. It reports its property and casualty insurance business in specialty sub-segments, including Property and transportation, Specialty casualty and Specialty financial. AFG sells traditional fixed and fixed-indexed annuities in the retail, financial institutions and education markets through independent producers and through direct relationships with certain financial institutions. AFG also sells single premium annuities in financial institutions through direct relationships with certain banks and through independent agents and brokers.
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