MGIC Investment Corporation (NYSE: MTG) and Stewart Information Services Corporation (NYSE:STC) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, risk, analyst recommendations, profitabiliy, institutional ownership, valuation and earnings.

Valuation & Earnings

This table compares MGIC Investment Corporation and Stewart Information Services Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
MGIC Investment Corporation $1.06 billion 4.07 $784.67 million $0.92 12.65
Stewart Information Services Corporation $2.02 billion 0.54 $145.76 million $2.49 18.56

MGIC Investment Corporation has higher revenue, but lower earnings than Stewart Information Services Corporation. MGIC Investment Corporation is trading at a lower price-to-earnings ratio than Stewart Information Services Corporation, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

86.1% of MGIC Investment Corporation shares are owned by institutional investors. Comparatively, 93.4% of Stewart Information Services Corporation shares are owned by institutional investors. 1.0% of MGIC Investment Corporation shares are owned by insiders. Comparatively, 2.2% of Stewart Information Services Corporation shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and target prices for MGIC Investment Corporation and Stewart Information Services Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MGIC Investment Corporation 0 1 8 0 2.89
Stewart Information Services Corporation 3 1 0 0 1.25

MGIC Investment Corporation presently has a consensus target price of $11.50, indicating a potential downside of 1.20%. Stewart Information Services Corporation has a consensus target price of $43.50, indicating a potential downside of 5.86%. Given MGIC Investment Corporation’s stronger consensus rating and higher possible upside, equities research analysts clearly believe MGIC Investment Corporation is more favorable than Stewart Information Services Corporation.

Dividends

Stewart Information Services Corporation pays an annual dividend of $1.20 per share and has a dividend yield of 2.6%. MGIC Investment Corporation does not pay a dividend. Stewart Information Services Corporation pays out 48.2% of its earnings in the form of a dividend.

Risk & Volatility

MGIC Investment Corporation has a beta of 2.07, meaning that its share price is 107% more volatile than the S&P 500. Comparatively, Stewart Information Services Corporation has a beta of 0.81, meaning that its share price is 19% less volatile than the S&P 500.

Profitability

This table compares MGIC Investment Corporation and Stewart Information Services Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MGIC Investment Corporation 34.10% 17.00% 7.52%
Stewart Information Services Corporation 3.52% 10.64% 5.17%

Summary

MGIC Investment Corporation beats Stewart Information Services Corporation on 10 of the 16 factors compared between the two stocks.

MGIC Investment Corporation Company Profile

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).

Stewart Information Services Corporation Company Profile

Stewart Information Services Corporation is a global real estate services company. The Company is engaged in offering products and services through its direct operations, network of Stewart Trusted Providers and family of companies. The Company operates through two segments: title insurance and ancillary services and corporate. Title insurance and related services (title) segment provides services needed to transfer title to property in a real estate transaction and includes services, such as searching, examining, closing and insuring the condition of the title to the property. The ancillary services and corporate segment provides appraisal and valuation services, document management, recording and call center-related services offered to mortgage lenders and servicers, mortgage brokers and mortgage investors. Its primary international operations are located in Canada, the United Kingdom, Australia and Central Europe.

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