Critical Contrast: MBIA (NYSE:MBI) and Mercury General (NYSE:MCY)

Mercury General (NYSE:MCY – Get Free Report) and MBIA (NYSE:MBI – Get Free Report) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, risk, earnings, analyst recommendations, valuation, dividends and institutional ownership.

Insider and Institutional Ownership

42.4% of Mercury General shares are owned by institutional investors. Comparatively, 61.0% of MBIA shares are owned by institutional investors. 35.5% of Mercury General shares are owned by company insiders. Comparatively, 11.3% of MBIA shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current recommendations and price targets for Mercury General and MBIA, as reported by MarketBeat.

MBIA has a consensus target price of $7.00, suggesting a potential upside of 59.13%. Given MBIA’s higher possible upside, analysts clearly believe MBIA is more favorable than Mercury General.

Profitability

This table compares Mercury General and MBIA’s net margins, return on equity and return on assets.

Earnings & Valuation

This table compares Mercury General and MBIA”s gross revenue, earnings per share and valuation.

Mercury General has higher revenue and earnings than MBIA. MBIA is trading at a lower price-to-earnings ratio than Mercury General, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Mercury General has a beta of 0.9, meaning that its share price is 10% less volatile than the S&P 500. Comparatively, MBIA has a beta of 1.64, meaning that its share price is 64% more volatile than the S&P 500.

Summary

Mercury General beats MBIA on 10 of the 14 factors compared between the two stocks.

About Mercury General

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Mercury General Corporation, together with its subsidiaries, engages in writing personal automobile insurance in the United States. The company also writes homeowners, commercial automobile, commercial property, mechanical protection, and umbrella insurance products. Its automobile insurance products include collision, property damage, bodily injury, comprehensive, personal injury protection, underinsured and uninsured motorist, and other hazards; and homeowners insurance products comprise dwelling, liability, personal property, and other coverages. The company sells its policies through a network of independent agents, insurance agencies, as well as directly through internet sales portals in Arizona, California, Florida, Georgia, Illinois, Nevada, New Jersey, New York, Oklahoma, Texas, and Virginia. Mercury General Corporation was founded in 1961 and is headquartered in Los Angeles, California.

About MBIA

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MBIA Inc. provides financial guarantee insurance services to public finance markets in the United States. It operates United States (U.S.) Public Finance Insurance, and International and Structured Finance Insurance segments. The company issues financial guarantees for municipal bonds, including tax-exempt and taxable indebtedness of the U.S. political subdivisions, as well as utility districts, airports, health care institutions, higher educational facilities, housing authorities, and other similar agencies and obligations issued by private entities. It also insures the non-U.S. public finance and global structured finance, including asset-backed obligations; and sovereign-related and sub-sovereign bonds, and privately issued bonds used for the financing for utilities, toll roads, bridges, public transportation facilities, and other types of infrastructure projects, as well as offers third-party reinsurance services. MBIA Inc. was founded in 1973 and is headquartered in Purchase, New York.