Critical Survey: Assured Guaranty (NYSE:AGO) versus Hippo (NYSE:HIPO)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Hippo	12.31%	-2.24%	-0.48%
Assured Guaranty	45.31%	7.77%	3.68%

Analyst Recommendations

This is a summary of current ratings for Hippo and Assured Guaranty, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hippo	0	3	4	0	2.57
Assured Guaranty	0	2	2	0	2.50

Hippo currently has a consensus price target of $37.25, suggesting a potential upside of 42.01%. Assured Guaranty has a consensus price target of $101.00, suggesting a potential upside of 17.97%. Given Hippo’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Hippo is more favorable than Assured Guaranty.

Insider & Institutional Ownership

43.0% of Hippo shares are held by institutional investors. Comparatively, 92.2% of Assured Guaranty shares are held by institutional investors. 10.8% of Hippo shares are held by insiders. Comparatively, 5.1% of Assured Guaranty shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hippo	$468.60 million	1.42	$57.70 million	$2.14	12.26
Assured Guaranty	$1.11 billion	3.47	$503.00 million	$10.24	8.36

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

Volatility and Risk

Hippo has a beta of 1.57, meaning that its stock price is 57% more volatile than the S&P 500. Comparatively, Assured Guaranty has a beta of 0.9, meaning that its stock price is 10% less volatile than the S&P 500.

Summary

Assured Guaranty beats Hippo on 8 of the 14 factors compared between the two stocks.

About Hippo

Hippo Holdings Inc. provides property and casualty insurance products to individuals and business customers primarily in the United States. The company operates through three segments: Services, Insurance-as-a-Service, and Hippo Home Insurance Program. Its insurance products include homeowners' insurance against risks of fire, wind, and theft, as well as other personal lines policies from third party carriers; and personal and commercial, as well as home, auto, cyber, small business, life, specialty lines, and other insurance products. The company distributes insurance products and services through its technology platform and website, as well as operates licensed insurance agencies. Hippo Holdings Inc. is headquartered in Palo Alto, California.

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.