MBIA (NYSE:MBI – Get Free Report) and Root (NASDAQ:ROOT – Get Free Report) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, dividends, earnings, profitability, valuation, institutional ownership and analyst recommendations.
Volatility & Risk
MBIA has a beta of 1.76, suggesting that its share price is 76% more volatile than the S&P 500. Comparatively, Root has a beta of 2.91, suggesting that its share price is 191% more volatile than the S&P 500.
Profitability
This table compares MBIA and Root’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| MBIA | -154.26% | N/A | -1.69% |
| Root | 3.78% | 19.72% | 3.56% |
Analyst Recommendations
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| MBIA | 1 | 0 | 1 | 0 | 2.00 |
| Root | 1 | 5 | 1 | 0 | 2.00 |
MBIA currently has a consensus price target of $7.00, suggesting a potential upside of 55.35%. Root has a consensus price target of $58.75, suggesting a potential upside of 20.51%. Given MBIA’s higher possible upside, equities research analysts clearly believe MBIA is more favorable than Root.
Earnings & Valuation
This table compares MBIA and Root”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| MBIA | $80.00 million | 2.87 | -$177.00 million | ($2.89) | -1.56 |
| Root | $1.52 billion | 0.50 | $40.30 million | $3.54 | 13.77 |
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.
Insider & Institutional Ownership
61.0% of MBIA shares are owned by institutional investors. Comparatively, 59.8% of Root shares are owned by institutional investors. 11.3% of MBIA shares are owned by insiders. Comparatively, 12.0% of Root shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
Summary
Root beats MBIA on 9 of the 12 factors compared between the two stocks.
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.
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.
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