Comparing Ambac (AMBC) and Assured Guaranty (AGO)

Ambac (NASDAQ: AMBC) and Assured Guaranty (NYSE:AGO) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their risk, valuation, profitability, earnings, dividends, analyst recommendations and institutional ownership.

Dividends

Assured Guaranty pays an annual dividend of $0.64 per share and has a dividend yield of 1.8%. Ambac does not pay a dividend. Assured Guaranty has raised its dividend for 6 consecutive years.

Analyst Ratings

This is a breakdown of current recommendations for Ambac and Assured Guaranty, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ambac 0 1 1 0 2.50
Assured Guaranty 0 0 4 0 3.00

Ambac presently has a consensus target price of $23.50, indicating a potential upside of 24.21%. Assured Guaranty has a consensus target price of $48.33, indicating a potential upside of 36.15%. Given Assured Guaranty’s stronger consensus rating and higher probable upside, analysts clearly believe Assured Guaranty is more favorable than Ambac.

Risk & Volatility

Ambac has a beta of 1.69, indicating that its stock price is 69% more volatile than the S&P 500. Comparatively, Assured Guaranty has a beta of 1.31, indicating that its stock price is 31% more volatile than the S&P 500.

Profitability

This table compares Ambac and Assured Guaranty’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ambac 15.31% 13.71% 1.11%
Assured Guaranty 40.53% 7.97% 3.76%

Insider & Institutional Ownership

74.9% of Ambac shares are held by institutional investors. 1.0% of Ambac shares are held by insiders. Comparatively, 2.6% of Assured Guaranty shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Ambac and Assured Guaranty’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ambac $621.25 million 1.38 -$328.71 million N/A N/A
Assured Guaranty $1.74 billion 2.29 $730.00 million N/A N/A

Assured Guaranty has higher revenue and earnings than Ambac.

Summary

Assured Guaranty beats Ambac on 12 of the 15 factors compared between the two stocks.

Ambac Company Profile

Ambac Financial Group, Inc., a financial services holding company, provides financial guarantees to clients in public and private sectors worldwide. It offers financial guarantee insurance policies and credit derivative contracts for public finance, structured finance, and international finance. The company was founded in 1971 and is headquartered in New York, New York.

Assured Guaranty Company Profile

Assured Guaranty Ltd., through its subsidiaries, provides credit protection products to public finance, infrastructure, and structured finance markets in the United States and internationally. It offers financial guaranty insurance that protects holders of debt instruments and other monetary obligations from defaults in scheduled payments. The company insures various debt obligations, including bonds issued by the United States state or municipal governmental authorities; and notes issued to finance infrastructure projects. It also insures and reinsures various types of the United States public finance obligations, such as general obligation, tax-backed, municipal utility, transportation, healthcare, higher education, infrastructure, housing revenue, investor-owned utility, and other public finance bonds; and various types of non-United States public finance obligations comprising infrastructure finance, regulated utilities, pooled infrastructure, and other public finance obligations. In addition, the company insures and reinsures various types of the United States and non-United States structured finance obligations, including pooled corporate obligations, residential mortgage-backed securities, insurance securitization obligations, consumer receivables securities, financial products, commercial receivables securities, commercial mortgage-backed securities, and other structured finance securities. It markets its financial guaranty insurance directly to issuers and underwriters of public finance and structured finance securities, as well as to investors in such obligations. Assured Guaranty Ltd. was founded in 2003 and is headquartered in Hamilton, Bermuda.

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