Reviewing Ambac Financial Group (AMBC) and MBIA (MBI)

Ambac Financial Group (NASDAQ: AMBC) and MBIA (NYSE:MBI) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their dividends, valuation, earnings, analyst recommendations, profitability, institutional ownership and risk.

Volatility and Risk

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Ambac Financial Group has a beta of 1.7, suggesting that its share price is 70% more volatile than the S&P 500. Comparatively, MBIA has a beta of 1.97, suggesting that its share price is 97% more volatile than the S&P 500.

Earnings & Valuation

This table compares Ambac Financial Group and MBIA’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ambac Financial Group $621.25 million 1.30 -$328.71 million N/A N/A
MBIA $433.00 million 1.92 -$1.61 billion N/A N/A

Ambac Financial Group has higher revenue and earnings than MBIA.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Ambac Financial Group and MBIA, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ambac Financial Group 0 1 1 0 2.50
MBIA 0 1 2 0 2.67

Ambac Financial Group presently has a consensus price target of $23.50, suggesting a potential upside of 32.32%. MBIA has a consensus price target of $14.50, suggesting a potential upside of 54.91%. Given MBIA’s stronger consensus rating and higher possible upside, analysts plainly believe MBIA is more favorable than Ambac Financial Group.

Profitability

This table compares Ambac Financial Group and MBIA’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ambac Financial Group -52.91% -9.12% -0.72%
MBIA -370.67% -19.69% -4.16%

Institutional & Insider Ownership

75.2% of Ambac Financial Group shares are owned by institutional investors. 1.0% of Ambac Financial Group shares are owned by insiders. Comparatively, 4.1% of MBIA shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

About Ambac Financial Group

Ambac Financial Group, Inc., a financial services holding company, provides financial guarantees and other financial services to clients in both the public and private sectors worldwide. It operates through two segments, Financial Guarantee and Financial Services. The Financial Guarantee segment provides financial guarantees, including insurance policies and credit derivative contracts for public finance, structured finance, and international obligations. The Financial Services segment offers investment agreements, funding conduits, and interest rate swaps, principally to clients of the financial guarantee business. The company was founded in 1971 and is headquartered in New York, New York.

About MBIA

MBIA, Inc. operates as holding company, which through its subsidiaries, provides financial guarantee insurance, as well as related reinsurance, advisory and portfolio services and asset management advisory services, for the public and structured finance markets. It operates through the following business segments: U.S. Public Finance Insurance, Corporate, International and Structured Finance Insurance. The U.S. Public Finance Insurance segment is principally conducted through National. National issues financial guarantees for municipal bonds, including tax-exempt and taxable indebtedness of U.S. political subdivisions, as well as utilities, airports, health care institutions, higher educational facilities, student loan issuers, housing authorities and other similar agencies and obligations issued by private entities that finance projects that serve a substantial public purpose. The Corporate segment consists of general corporate activities, including providing general support services to MBIA’s other operating businesses and asset and capital management. The International and Structured Finance Insurance segment is conducted through the MBIA Corp. The company was founded in 1973 and is headquartered in Purchase, NY.

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