Assured Guaranty (NYSE: AGO) and Cna Financial (NYSE:CNA) are both mid-cap financials companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, earnings, dividends, risk, analyst recommendations, valuation and institutional ownership.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Assured Guaranty and Cna Financial, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Assured Guaranty 0 0 3 0 3.00
Cna Financial 0 2 0 0 2.00

Assured Guaranty currently has a consensus price target of $48.00, suggesting a potential upside of 32.27%. Cna Financial has a consensus price target of $50.50, suggesting a potential downside of 7.17%. Given Assured Guaranty’s stronger consensus rating and higher probable upside, equities analysts plainly believe Assured Guaranty is more favorable than Cna Financial.

Profitability

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

Net Margins Return on Equity Return on Assets
Assured Guaranty 45.38% 10.59% 4.88%
Cna Financial 9.67% 7.14% 1.53%

Valuation & Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Assured Guaranty $1.68 billion 2.54 $881.00 million $6.96 5.21
Cna Financial $9.37 billion 1.58 $859.00 million $3.37 16.14

Assured Guaranty has higher earnings, but lower revenue than Cna Financial. Assured Guaranty is trading at a lower price-to-earnings ratio than Cna Financial, indicating that it is currently the more affordable of the two stocks.

Dividends

Assured Guaranty pays an annual dividend of $0.57 per share and has a dividend yield of 1.6%. Cna Financial pays an annual dividend of $1.20 per share and has a dividend yield of 2.2%. Assured Guaranty pays out 8.2% of its earnings in the form of a dividend. Cna Financial pays out 35.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Cna Financial has increased its dividend for 6 consecutive years. Cna Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

95.9% of Assured Guaranty shares are owned by institutional investors. Comparatively, 99.7% of Cna Financial shares are owned by institutional investors. 2.6% of Assured Guaranty shares are owned by insiders. Comparatively, 0.5% of Cna Financial shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Volatility & Risk

Assured Guaranty has a beta of 1.64, indicating that its share price is 64% more volatile than the S&P 500. Comparatively, Cna Financial has a beta of 1.32, indicating that its share price is 32% more volatile than the S&P 500.

Summary

Assured Guaranty beats Cna Financial on 12 of the 17 factors compared between the two stocks.

Assured Guaranty Company Profile

Assured Guaranty Ltd. is a holding company. The Company, through its subsidiaries, provides credit protection products to the United States and international public finance, including infrastructure, and structured finance markets. It applies its credit underwriting judgment, risk management skills and capital markets experience primarily to offer financial guaranty insurance that protects holders of debt instruments and other monetary obligations from defaults in scheduled payments. 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. It guarantees obligations issued principally in the United States and the United Kingdom and also guarantees obligations issued in other countries and regions, including Australia and Western Europe. It also provides other forms of insurance that are in line with its risk profile and benefit from its underwriting experience.

Cna Financial Company Profile

CNA Financial Corporation is an insurance holding company. The Company’s segments include Specialty, Commercial, International, Life & Group Non-Core, and Corporate & Other Non-Core. Its Specialty segment provides a range of professional, financial, and specialty property, and casualty products and services. The Commercial segment includes property and casualty insurance products and services to small, middle-market and large businesses. Its International segment provides management and professional liability coverages, as well as a range of other property and casualty insurance products and services. The Life & Group Non-Core segment primarily includes the results of its individual and group long term care businesses that are in run-off. Its Corporate & Other Non-Core segment primarily includes certain corporate expenses, including interest on corporate debt, and the results of certain property and casualty business in run-off.

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