Contrasting MGIC Investment (NYSE:MTG) and Global Payments (NYSE:GPN)

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

Earnings & Valuation

This table compares MGIC Investment and Global Payments”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MGIC Investment	$1.20 billion	4.93	$738.35 million	$3.20	8.98
Global Payments	$7.71 billion	2.93	$1.40 billion	($2.98)	-28.61

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

Profitability

This table compares MGIC Investment and Global Payments’ 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%
Global Payments	-9.16%	13.80%	5.73%

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MGIC Investment	0	5	1	2	2.62
Global Payments	3	17	10	0	2.23

MGIC Investment currently has a consensus target price of $30.60, indicating a potential upside of 6.52%. Global Payments has a consensus target price of $92.85, indicating a potential upside of 8.91%. Given Global Payments’ higher possible upside, analysts plainly believe Global Payments is more favorable than MGIC Investment.

Volatility & Risk

MGIC Investment has a beta of 0.65, indicating that its share price is 35% less volatile than the S&P 500. Comparatively, Global Payments has a beta of 0.78, indicating that its share price is 22% less volatile than the S&P 500.

Institutional and Insider Ownership

95.6% of MGIC Investment shares are held by institutional investors. Comparatively, 89.8% of Global Payments shares are held by institutional investors. 1.3% of MGIC Investment shares are held by insiders. Comparatively, 0.6% of Global Payments shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

MGIC Investment pays an annual dividend of $0.68 per share and has a dividend yield of 2.4%. Global Payments pays an annual dividend of $1.00 per share and has a dividend yield of 1.2%. MGIC Investment pays out 21.3% of its earnings in the form of a dividend. Global Payments pays out -33.6% 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. MGIC Investment has increased its dividend for 6 consecutive years. MGIC Investment is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

MGIC Investment beats Global Payments on 12 of the 18 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 Global Payments

Global Payments Inc. provides payment technology and software solutions for card, check, and digital-based payments in the Americas, Europe, and the Asia-Pacific. It operates through two segments, Merchant Solutions and Issuer Solutions. The Merchant Solutions segment offers authorization, settlement and funding, customer support, chargeback resolution, terminal rental, sales and deployment, payment security, and consolidated billing and reporting services. This segment also provides an array of enterprise software solutions that streamline business operations of its customers in various vertical markets; and value-added solutions and services, such as point-of-sale software, analytics and customer engagement, payroll and reporting, and human capital management. The Issuer Solutions segment offers solutions that enable financial institutions and retailers to manage their card portfolios through a platform; and commercial payments, account payables, and electronic payment alternatives solutions for businesses and governments. It markets its products and services through direct sales force, trade associations, agent and enterprise software providers, referral arrangements with value-added resellers, and independent sales organizations. The company was founded in 1967 and is headquartered in Atlanta, Georgia.