State Auto Financial (NASDAQ: STFC) and MBIA (NYSE:MBI) are both small-cap financials companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, dividends, profitability, analyst recommendations, institutional ownership, risk and valuation.
Institutional and Insider Ownership
33.1% of State Auto Financial shares are owned by institutional investors. 1.5% of State Auto Financial shares are owned by insiders. Comparatively, 4.1% of MBIA shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
This table compares State Auto Financial and MBIA’s net margins, return on equity and return on assets.
||Return on Equity
||Return on Assets
|State Auto Financial
Volatility & Risk
State Auto Financial has a beta of 0.85, meaning that its share price is 15% less volatile than the S&P 500. Comparatively, MBIA has a beta of 2.46, meaning that its share price is 146% more volatile than the S&P 500.
State Auto Financial pays an annual dividend of $0.40 per share and has a dividend yield of 1.4%. MBIA does not pay a dividend. State Auto Financial pays out 63.5% of its earnings in the form of a dividend.
This is a summary of recent ratings and target prices for State Auto Financial and MBIA, as reported by MarketBeat.com.
||Strong Buy Ratings
|State Auto Financial
State Auto Financial currently has a consensus target price of $26.00, suggesting a potential downside of 10.03%. MBIA has a consensus target price of $14.50, suggesting a potential upside of 91.80%. Given MBIA’s stronger consensus rating and higher possible upside, analysts plainly believe MBIA is more favorable than State Auto Financial.
Valuation & Earnings
This table compares State Auto Financial and MBIA’s top-line revenue, earnings per share (EPS) and valuation.
||Earnings Per Share
|State Auto Financial
State Auto Financial has higher revenue and earnings than MBIA. MBIA is trading at a lower price-to-earnings ratio than State Auto Financial, indicating that it is currently the more affordable of the two stocks.
State Auto Financial beats MBIA on 9 of the 16 factors compared between the two stocks.
State Auto Financial Company Profile
State Auto Financial Corporation is a property and casualty insurance holding company. The Company is engaged in writing personal, business and specialty insurance. Its segments include Personal Insurance Segment, Commercial Insurance Segment and Specialty Insurance Segment. Its Personal Insurance Segment include personal auto, homeowners and other personal; Commercial Insurance Segment include commercial auto, small commercial package, middle market commercial, workers’ compensation and other commercial, and Specialty Insurance Segment include Excess & Surplus (E&S) property, E&S casualty and programs. State Auto Financial’s subsidiaries include State Auto Property & Casualty Insurance Company (State Auto P&C), Milbank Insurance Company (Milbank) and State Auto Insurance Company of Ohio (SA Ohio), each of which is a property and casualty insurance company, and Stateco Financial Services, Inc., (Stateco), which provides investment management services to affiliated insurance companies.
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.
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