Head to Head Review: MBIA (NYSE:MBI) versus Root (NASDAQ:ROOT)

Root (NASDAQ:ROOT) and MBIA (NYSE:MBI) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their risk, analyst recommendations, institutional ownership, valuation, profitability, earnings and dividends.

Analyst Ratings

This is a summary of current recommendations for Root and MBIA, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Root	1	5	1	0	2.00
MBIA	1	0	1	0	2.00

Root currently has a consensus target price of $58.75, suggesting a potential upside of 20.51%. MBIA has a consensus target price of $7.00, suggesting a potential upside of 55.35%. Given MBIA’s higher probable upside, analysts plainly believe MBIA is more favorable than Root.

Profitability

This table compares Root and MBIA’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Root	3.78%	19.72%	3.56%
MBIA	-154.26%	N/A	-1.69%

Earnings and Valuation

This table compares Root and MBIA”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Root	$1.52 billion	0.50	$40.30 million	$3.54	13.77
MBIA	$80.00 million	2.87	-$177.00 million	($2.89)	-1.56

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

Institutional and Insider Ownership

59.8% of Root shares are held by institutional investors. Comparatively, 61.0% of MBIA shares are held by institutional investors. 12.0% of Root shares are held by insiders. Comparatively, 11.3% of MBIA shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Risk and Volatility

Root has a beta of 2.91, indicating that its share price is 191% more volatile than the S&P 500. Comparatively, MBIA has a beta of 1.76, indicating that its share price is 76% more volatile than the S&P 500.

Summary

Root beats MBIA on 9 of the 12 factors compared between the two stocks.

About Root

Root, Inc. provides insurance products and services in the United States. The company offers automobile, homeowners, and renters insurance products. It operates a direct-to-consumer model; and serves customers primarily through mobile applications, as well as through its website. The company's direct distribution channels also cover digital, media, and referral channels, as well as distribution partners and agencies. Root, Inc. was incorporated in 2015 and is headquartered in Columbus, Ohio.

About MBIA

MBIA Inc. provides financial guarantee insurance services to public finance markets in the United States. It operates United States (U.S.) Public Finance Insurance, and International and Structured Finance Insurance segments. The company issues financial guarantees for municipal bonds, including tax-exempt and taxable indebtedness of the U.S. political subdivisions, as well as utility districts, airports, health care institutions, higher educational facilities, housing authorities, and other similar agencies and obligations issued by private entities. It also insures the non-U.S. public finance and global structured finance, including asset-backed obligations; and sovereign-related and sub-sovereign bonds, and privately issued bonds used for the financing for utilities, toll roads, bridges, public transportation facilities, and other types of infrastructure projects, as well as offers third-party reinsurance services. MBIA Inc. was founded in 1973 and is headquartered in Purchase, New York.