Reviewing MGIC Investment (NYSE:MTG) & MetLife (NYSE:MET)

MetLife (NYSE:MET) and MGIC Investment (NYSE:MTG) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, risk, dividends and earnings.

Risk & Volatility

MetLife has a beta of 0.85, meaning that its share price is 15% less volatile than the S&P 500. Comparatively, MGIC Investment has a beta of 0.9, meaning that its share price is 10% less volatile than the S&P 500.

Profitability

This table compares MetLife and MGIC Investment’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MetLife	5.83%	19.88%	0.82%
MGIC Investment	62.58%	14.73%	11.62%

Analyst Recommendations

This is a breakdown of recent recommendations for MetLife and MGIC Investment, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MetLife	0	1	10	0	2.91
MGIC Investment	1	5	0	0	1.83

MetLife presently has a consensus target price of $95.60, indicating a potential upside of 17.72%. MGIC Investment has a consensus target price of $26.67, indicating a potential downside of 4.79%. Given MetLife’s stronger consensus rating and higher probable upside, equities research analysts clearly believe MetLife is more favorable than MGIC Investment.

Institutional & Insider Ownership

95.0% of MetLife shares are held by institutional investors. Comparatively, 95.6% of MGIC Investment shares are held by institutional investors. 0.4% of MetLife shares are held by insiders. Comparatively, 1.1% of MGIC Investment shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares MetLife and MGIC Investment”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MetLife	$70.99 billion	0.76	$4.43 billion	$5.90	13.76
MGIC Investment	$1.21 billion	5.35	$762.99 million	$3.05	9.18

MetLife has higher revenue and earnings than MGIC Investment. MGIC Investment is trading at a lower price-to-earnings ratio than MetLife, indicating that it is currently the more affordable of the two stocks.

Dividends

MetLife pays an annual dividend of $2.27 per share and has a dividend yield of 2.8%. MGIC Investment pays an annual dividend of $0.60 per share and has a dividend yield of 2.1%. MetLife pays out 38.5% of its earnings in the form of a dividend. MGIC Investment pays out 19.7% 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. MetLife has increased its dividend for 12 consecutive years and MGIC Investment has increased its dividend for 6 consecutive years. MetLife is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

MetLife beats MGIC Investment on 10 of the 17 factors compared between the two stocks.

About MetLife

MetLife, Inc., a financial services company, provides insurance, annuities, employee benefits, and asset management services worldwide. It operates through six segments: Retirement and Income Solutions; Group Benefits; Asia; Latin America; Europe, the Middle East and Africa; and MetLife Holdings. The company offers life, dental, group short-and long-term disability, individual disability, pet insurance, accidental death and dismemberment, vision, and accident and health coverages, as well as prepaid legal plans; administrative services-only arrangements to employers; and general and separate account, and synthetic guaranteed interest contracts, as well as private floating rate funding agreements. It also provides pension risk transfers, institutional income annuities, structured settlements, and capital markets investment products; and other products and services, such as life insurance products and funding agreements for funding postretirement benefits, as well as company, bank, or trust-owned life insurance used to finance nonqualified benefit programs for executives. In addition, it provides fixed, indexed-linked, and variable annuities; pension products; regular savings products; whole and term life, endowments, universal and variable life, and group life products; longevity reinsurance solutions; credit insurance products; and protection against long-term health care services. MetLife, Inc. was incorporated in 1999 and is based in New York, New York.

About MGIC Investment

MGIC Investment Corporation, through its subsidiaries, provides private mortgage insurance, other mortgage credit risk management solutions, and ancillary services to lenders and government sponsored entities in the United States, the District of Columbia, Puerto Rico, and Guam. The company offers primary mortgage insurance that provides mortgage default protection on individual loans, as well as covers unpaid loan principal, delinquent interest, and various expenses associated with the default and subsequent foreclosure. It also provides pool insurance for secondary market mortgage transactions; and contract underwriting services, as well as reinsurance. The company serves originators of residential mortgage loans, including savings institutions, commercial banks, mortgage brokers, credit unions, mortgage bankers, and other lenders. MGIC Investment Corporation was founded in 1957 and is headquartered in Milwaukee, Wisconsin.