MBIA (NYSE: MBI) and Hallmark Financial Services (NASDAQ:HALL) are both small-cap financials companies, but which is the superior business? We will contrast the two businesses based on the strength of their analyst recommendations, profitability, earnings, institutional ownership, valuation, dividends and risk.

Risk & Volatility

MBIA has a beta of 2.46, meaning that its share price is 146% more volatile than the S&P 500. Comparatively, Hallmark Financial Services has a beta of 0.84, meaning that its share price is 16% less volatile than the S&P 500.

Insider and Institutional Ownership

65.0% of Hallmark Financial Services shares are held by institutional investors. 4.1% of MBIA shares are held by insiders. Comparatively, 28.7% of Hallmark Financial Services shares are held 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.

Profitability

This table compares MBIA and Hallmark Financial Services’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MBIA N/A -9.82% -2.40%
Hallmark Financial Services -1.19% -0.42% -0.09%

Valuation & Earnings

This table compares MBIA and Hallmark Financial Services’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
MBIA $294.00 million 2.39 -$338.00 million ($14.51) -0.53
Hallmark Financial Services $375.95 million 0.49 $6.52 million ($0.26) -39.08

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

Analyst Recommendations

This is a summary of current recommendations for MBIA and Hallmark Financial Services, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MBIA 0 0 2 0 3.00
Hallmark Financial Services 0 1 0 0 2.00

MBIA presently has a consensus price target of $14.50, indicating a potential upside of 89.54%. Given MBIA’s stronger consensus rating and higher possible upside, research analysts clearly believe MBIA is more favorable than Hallmark Financial Services.

About MBIA

MBIA Inc. is a holding company. The Company, through its subsidiaries, is engaged in the financial guarantee insurance businesses in the industry. The Company manages its business within three segments: United States (U.S.) public finance insurance; corporate, and international and structured finance insurance. The U.S. public finance insurance business is primarily operated through National Public Finance Guarantee Corporation. The corporate segment consists of general corporate activities, including providing general support services, including management, legal, accounting, treasury, information technology, and insurance portfolio surveillance, to other operating businesses, and asset and capital management. The international and structured finance insurance business is primarily operated through MBIA Insurance Corporation and its subsidiaries.

About Hallmark Financial Services

Hallmark Financial Services, Inc. is an insurance holding company. The Company markets, distributes, underwrites and services its property/casualty insurance products to businesses and individuals. Its business involves marketing, distributing, underwriting and servicing insurance products, as well as providing other insurance related services. Its segments include Standard Commercial Segment, Specialty Commercial Segment and Personal Segment. The Company’s Standard Commercial P&C operating unit primarily underwrites low-severity, short-tailed commercial property/casualty insurance products in the standard market. The Company reinsures a portion of the risk it underwrites in order to control the exposure to losses and to protect capital resources. Its Workers Compensation operating unit specializes in small and middle market workers compensation business. Its Specialty Commercial operating unit offers general aviation and satellite launch insurance products and services.

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