Reviewing Assured Guaranty (NYSE:AGO) & Equitable (NYSE:EQH)

Equitable (NYSE:EQH) and Assured Guaranty (NYSE:AGO) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, analyst recommendations, valuation, profitability, dividends, institutional ownership and earnings.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Equitable	-11.83%	140.87%	0.58%
Assured Guaranty	45.31%	7.77%	3.68%

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Equitable and Assured Guaranty, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Equitable	2	0	8	2	2.83
Assured Guaranty	0	2	2	0	2.50

Equitable presently has a consensus price target of $60.64, suggesting a potential upside of 54.13%. Assured Guaranty has a consensus price target of $101.00, suggesting a potential upside of 18.21%. Given Equitable’s stronger consensus rating and higher possible upside, analysts plainly believe Equitable is more favorable than Assured Guaranty.

Institutional and Insider Ownership

92.7% of Equitable shares are owned by institutional investors. Comparatively, 92.2% of Assured Guaranty shares are owned by institutional investors. 1.1% of Equitable shares are owned by company insiders. Comparatively, 5.1% of Assured Guaranty 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.

Dividends

Equitable pays an annual dividend of $1.08 per share and has a dividend yield of 2.7%. Assured Guaranty pays an annual dividend of $1.52 per share and has a dividend yield of 1.8%. Equitable pays out -22.4% of its earnings in the form of a dividend. Assured Guaranty pays out 14.8% 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. Equitable has raised its dividend for 2 consecutive years and Assured Guaranty has raised its dividend for 7 consecutive years. Equitable is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

Equitable has a beta of 1.12, suggesting that its stock price is 12% more volatile than the S&P 500. Comparatively, Assured Guaranty has a beta of 0.9, suggesting that its stock price is 10% less volatile than the S&P 500.

Earnings & Valuation

This table compares Equitable and Assured Guaranty”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Equitable	$11.67 billion	0.95	-$1.38 billion	($4.82)	-8.16
Assured Guaranty	$1.03 billion	3.75	$503.00 million	$10.24	8.34

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

Summary

Equitable beats Assured Guaranty on 10 of the 18 factors compared between the two stocks.

About Equitable

Equitable Holdings, Inc., together with its consolidated subsidiaries, operates as a diversified financial services company worldwide. The company operates through six segments: Individual Retirement, Group Retirement, Investment Management and Research, Protection Solutions, Wealth Management, and Legacy. The Individual Retirement segment offers a suite of variable annuity products primarily to affluent and high net worth individuals. The Group Retirement segment provides tax-deferred investment and retirement services or products to plans sponsored by educational entities, municipalities, and not-for-profit entities, as well as small and medium-sized businesses. The Investment Management and Research segment offers diversified investment management, research, and related services to various clients through institutional. The Protection Solutions segment provides life insurance products, such as VUL insurance and IUL insurance, term life, and employee benefits business, such as dental, vision, life, as well as short- and long-term disability insurance products to small and medium-sized businesses. The Wealth Management segment offers discretionary and non-discretionary investment advisory accounts, financial planning and advice, life insurance, and annuity products. The Legacy segment consists of the capital intensive fixed-rate GMxB business that includes ROP death benefits. The company was formerly known as AXA Equitable Holdings, Inc. and changed its name to Equitable Holdings, Inc. in January 2020. Equitable Holdings, Inc. was founded in 1859 and is based in New York, New York.

About Assured Guaranty

Assured Guaranty Ltd., together with its subsidiaries, provides credit protection products to public finance, infrastructure, and structured finance markets in the United States and internationally. It operates through two segments: Insurance and Asset Management. The company offers financial guaranty insurance that protects holders of debt instruments and other monetary obligations from defaults in scheduled payments. It insures and reinsures various debt obligations, including bonds issued by the United States state governmental authorities; and notes issued to finance infrastructure projects. In addition, the company insures and reinsures various the U.S. public finance obligations, such as general obligation, tax-backed, municipal utility, transportation, healthcare, higher education, infrastructure, housing revenue, investor-owned utility, renewable energy, and other public finance bonds. Further, the company involved in insuring and reinsuring of non-U.S. public finance obligations comprising regulated utilities, infrastructure finance, sovereign and sub-sovereign, renewable energy bonds, pooled infrastructure, and other public finance obligations; and the U.S. and non-U.S. Structured finance obligations, including residential mortgage-backed securities, life insurance transactions, consumer receivables securities, subscription finance facilities, pooled corporate obligations, and financial products. Additionally, it offers specialty business, such as real estate properties, insurance securitizations, and aircraft residual value insurance (RVI) transactions; and asset management services comprising investment advisory services. 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. Assured Guaranty Ltd. was incorporated in 2003 and is headquartered in Hamilton, Bermuda.