Ambac Financial Group (NYSE:AMBC) versus Arch Capital Group (NASDAQ:ACGL) Head-To-Head Comparison

Arch Capital Group (NASDAQ:ACGL) and Ambac Financial Group (NYSE:AMBC) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their analyst recommendations, risk, valuation, earnings, profitability, institutional ownership and dividends.

Valuation & Earnings

This table compares Arch Capital Group and Ambac Financial Group”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arch Capital Group	$19.04 billion	1.83	$4.31 billion	$10.69	8.98
Ambac Financial Group	$249.54 million	1.59	-$556.45 million	($15.34)	-0.59

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

Volatility & Risk

Arch Capital Group has a beta of 0.45, meaning that its stock price is 55% less volatile than the S&P 500. Comparatively, Ambac Financial Group has a beta of 0.96, meaning that its stock price is 4% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Arch Capital Group and Ambac Financial Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arch Capital Group	1	9	8	0	2.39
Ambac Financial Group	1	0	1	0	2.00

Arch Capital Group currently has a consensus target price of $106.60, indicating a potential upside of 11.07%. Ambac Financial Group has a consensus target price of $15.00, indicating a potential upside of 65.93%. Given Ambac Financial Group’s higher possible upside, analysts plainly believe Ambac Financial Group is more favorable than Arch Capital Group.

Institutional and Insider Ownership

89.1% of Arch Capital Group shares are held by institutional investors. Comparatively, 84.5% of Ambac Financial Group shares are held by institutional investors. 4.2% of Arch Capital Group shares are held by insiders. Comparatively, 6.2% 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 is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Arch Capital Group	20.96%	16.38%	4.62%
Ambac Financial Group	-215.40%	-3.50%	-0.49%

Summary

Arch Capital Group beats Ambac Financial Group on 11 of the 14 factors compared between the two stocks.

About Arch Capital Group

Arch Capital Group Ltd., together with its subsidiaries, provides insurance, reinsurance, and mortgage insurance products worldwide. The company's Insurance segment offers primary and excess casualty coverages; loss sensitive primary casualty insurance programs; directors' and officers' liability, errors and omissions liability, employment practices and fiduciary liability, crime, professional indemnity, and other financial related coverages; medical professional and general liability insurance coverages; and workers' compensation and umbrella liability, as well as commercial automobile and inland marine products. It also provides property, energy, marine, and aviation insurance; travel insurance; accident, disability, and medical plan insurance coverages; captive insurance programs; employer's liability; contract and commercial surety coverages; and collateral protection, debt cancellation, and service contract reimbursement products. This segment markets its products through a group of licensed independent retail and wholesale brokers. Its Reinsurance segment provides casualty reinsurance for third party liability exposures; marine and aviation; motor reinsurance, whole account multi-line treaties, cyber, trade credit, surety, accident and health, workers' compensation catastrophe, agriculture, trade credit, and political risk products; reinsurance protection for catastrophic losses, and personal lines and commercial property exposures; life reinsurance; casualty clash; and risk management solutions. This segment markets its reinsurance products through brokers. The company's Mortgage segment offers direct mortgage insurance and mortgage reinsurance. The company was founded in 1995 and is based in Pembroke, Bermuda.

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. Ambac Financial Group, Inc. was incorporated in 1991 and is headquartered in New York, New York.