MGIC Investment (NYSE:MTG – Get Free Report) and StoneCo (NASDAQ:STNE – Get Free Report) are both mid-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, valuation, earnings, analyst recommendations, profitability, risk and dividends.
Profitability
This table compares MGIC Investment and StoneCo’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| MGIC Investment | 59.20% | 13.90% | 10.81% |
| StoneCo | 22.92% | 22.19% | 4.10% |
Insider & Institutional Ownership
95.6% of MGIC Investment shares are held by institutional investors. Comparatively, 73.2% of StoneCo shares are held by institutional investors. 1.3% of MGIC Investment shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
Analyst Recommendations
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| MGIC Investment | 0 | 4 | 1 | 2 | 2.71 |
| StoneCo | 0 | 6 | 4 | 0 | 2.40 |
MGIC Investment presently has a consensus target price of $30.60, indicating a potential downside of 0.73%. StoneCo has a consensus target price of $14.30, indicating a potential upside of 44.01%. Given StoneCo’s higher probable upside, analysts clearly believe StoneCo is more favorable than MGIC Investment.
Risk and Volatility
MGIC Investment has a beta of 0.65, suggesting that its stock price is 35% less volatile than the S&P 500. Comparatively, StoneCo has a beta of 1.75, suggesting that its stock price is 75% more volatile than the S&P 500.
Valuation and Earnings
This table compares MGIC Investment and StoneCo”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| MGIC Investment | $1.21 billion | 5.21 | $738.35 million | $3.20 | 9.63 |
| StoneCo | $2.53 billion | 0.98 | $425.73 million | $2.48 | 4.00 |
MGIC Investment has higher earnings, but lower revenue than StoneCo. StoneCo is trading at a lower price-to-earnings ratio than MGIC Investment, indicating that it is currently the more affordable of the two stocks.
Summary
MGIC Investment beats StoneCo on 10 of the 15 factors compared between the two stocks.
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.
About StoneCo
StoneCo Ltd. provides financial technology and software solutions to merchants and integrated partners to conduct electronic commerce across in-store, online, and mobile channels in Brazil. It distributes its solutions, principally through proprietary Stone Hubs, which offer hyper-local sales and services; and sells solutions to brick-and-mortar and digital merchants through sales team. The company served small-and-medium-sized businesses; and marketplaces, e-commerce platforms, and integrated software vendors. StoneCo Ltd. was founded in 2000 and is headquartered in George Town, the Cayman Islands.
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