MGIC Investment Corporation (NYSE: MTG) and AmTrust Financial Services (NASDAQ:AFSI) are both mid-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, earnings, dividends, profitability, risk and valuation.
Risk & Volatility
MGIC Investment Corporation has a beta of 2.08, meaning that its stock price is 108% more volatile than the S&P 500. Comparatively, AmTrust Financial Services has a beta of 1.16, meaning that its stock price is 16% more volatile than the S&P 500.
AmTrust Financial Services pays an annual dividend of $0.68 per share and has a dividend yield of 4.8%. MGIC Investment Corporation does not pay a dividend. AmTrust Financial Services pays out 51.1% of its earnings in the form of a dividend.
Insider & Institutional Ownership
86.6% of MGIC Investment Corporation shares are held by institutional investors. Comparatively, 44.7% of AmTrust Financial Services shares are held by institutional investors. 1.0% of MGIC Investment Corporation shares are held by insiders. Comparatively, 50.8% of AmTrust Financial Services shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
This table compares MGIC Investment Corporation and AmTrust Financial Services’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|MGIC Investment Corporation||34.99%||16.56%||7.72%|
|AmTrust Financial Services||5.14%||14.82%||1.68%|
This is a breakdown of current ratings and target prices for MGIC Investment Corporation and AmTrust Financial Services, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|MGIC Investment Corporation||0||1||8||0||2.89|
|AmTrust Financial Services||0||1||3||0||2.75|
MGIC Investment Corporation currently has a consensus price target of $11.78, indicating a potential upside of 3.95%. AmTrust Financial Services has a consensus price target of $19.50, indicating a potential upside of 38.49%. Given AmTrust Financial Services’ higher possible upside, analysts plainly believe AmTrust Financial Services is more favorable than MGIC Investment Corporation.
Earnings & Valuation
This table compares MGIC Investment Corporation and AmTrust Financial Services’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|MGIC Investment Corporation||$1.06 billion||3.96||$801.94 million||$0.97||11.68|
|AmTrust Financial Services||$5.88 billion||0.41||$483.13 million||$1.33||10.59|
MGIC Investment Corporation has higher revenue, but lower earnings than AmTrust Financial Services. AmTrust Financial Services is trading at a lower price-to-earnings ratio than MGIC Investment Corporation, indicating that it is currently the more affordable of the two stocks.
MGIC Investment Corporation beats AmTrust Financial Services 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 AmTrust Financial Services
Amtrust Financial Services, Inc. (AmTrust) is an insurance holding company. The Company, through its subsidiaries, provides specialty property and casualty insurance focusing on workers’ compensation and commercial package coverage for small business, specialty risk and extended warranty coverage, and property and casualty coverage for middle market business. Its segments include Small Commercial Business, Specialty Risk and Extended Warranty, and Specialty Program. The Small Commercial Business segment is engaged in providing workers’ compensation, commercial package and other commercial insurance lines produced by wholesale agents, retail agents and brokers in the United States. The Specialty Risk and Extended Warranty segment is engaged in providing coverage for consumer and commercial goods and custom designed coverages. The Specialty Program segment is engaged in writing commercial insurance for defined classes of insureds through general and other wholesale agents.
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