Ambac Financial Group (NYSE:AMBC) and Hippo (NYSE:HIPO) Critical Analysis

Hippo (NYSE:HIPO) and Ambac Financial Group (NYSE:AMBC) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, risk, dividends, institutional ownership, analyst recommendations, profitability and earnings.

Institutional & Insider Ownership

30.9% of Hippo shares are held by institutional investors. Comparatively, 81.7% of Ambac Financial Group shares are held by institutional investors. 11.3% of Hippo shares are held by insiders. Comparatively, 3.4% of Ambac Financial Group shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Hippo and Ambac Financial Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hippo	-240.20%	-56.30%	-19.30%
Ambac Financial Group	111.98%	41.52%	6.14%

Analyst Ratings

This is a summary of current ratings and recommmendations for Hippo and Ambac Financial Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hippo	0	2	3	0	2.60
Ambac Financial Group	0	1	1	0	2.50

Hippo presently has a consensus target price of $27.38, suggesting a potential upside of 190.91%. Ambac Financial Group has a consensus target price of $18.00, suggesting a potential upside of 40.73%. Given Hippo’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Hippo is more favorable than Ambac Financial Group.

Valuation and Earnings

This table compares Hippo and Ambac Financial Group’s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hippo	$119.70 million	1.86	-$333.40 million	($16.02)	-0.59
Ambac Financial Group	$505.00 million	1.15	$521.00 million	$10.25	1.25

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

Risk & Volatility

Hippo has a beta of 0.99, suggesting that its share price is 1% less volatile than the S&P 500. Comparatively, Ambac Financial Group has a beta of 1.14, suggesting that its share price is 14% more volatile than the S&P 500.

Summary

Ambac Financial Group beats Hippo on 8 of the 13 factors compared between the two stocks.

About Hippo

Hippo Holdings Inc. provides home protection insurance in the United States and the District of Columbia. Its insurance products include homeowners' insurance against risks of fire, wind, and theft; and personal and commercial insurance products. The company distributes insurance products and services through its technology platform; and offers its policies online, over the phone, or through licensed insurance agents. It provides care and protection for homeowners, as well as operates an integrated home protection platform. The company is headquartered in Palo Alto, California.

About Ambac Financial Group

Ambac Financial Group, Inc. operates as a financial services holding company. It operates three businesses: Specialty Property and Casualty Insurance, Insurance Distribution, and Legacy Financial Guarantee (LFG) Insurance. The Specialty Property and Casualty Insurance business provides specialty property and casualty program insurance with a focus commercial and personal liability risks. The Insurance Distribution business includes the specialty property and casualty insurance distribution business, which includes managing general agents and underwriters, insurance wholesalers, brokers, and other distribution businesses. The LFG Insurance business offers financial guarantee insurance policies that provide an unconditional and irrevocable guarantee, which protects the holder of a debt obligation against non-payment when due of the principal and interest on the obligations guaranteed. The company was incorporated in 1991 and is headquartered in New York, New York.