Financial Analysis: MetLife (NYSE:MET) and MBIA (NYSE:MBI)

MBIA (NYSE:MBI) and MetLife (NYSE:MET) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, earnings, risk, dividends, profitability and analyst recommendations.

Volatility and Risk

MBIA has a beta of 1.91, meaning that its share price is 91% more volatile than the S&P 500. Comparatively, MetLife has a beta of 0.76, meaning that its share price is 24% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
MBIA	-198.88%	N/A	-2.12%
MetLife	5.30%	21.00%	0.85%

Analyst Recommendations

This is a summary of current ratings for MBIA and MetLife, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MBIA	1	0	1	0	2.00
MetLife	0	3	9	2	2.93

MBIA currently has a consensus target price of $8.50, suggesting a potential upside of 21.78%. MetLife has a consensus target price of $95.42, suggesting a potential upside of 21.38%. Given MBIA’s higher possible upside, equities analysts clearly believe MBIA is more favorable than MetLife.

Institutional and Insider Ownership

61.0% of MBIA shares are held by institutional investors. Comparatively, 95.0% of MetLife shares are held by institutional investors. 12.6% of MBIA shares are held by insiders. Comparatively, 0.4% of MetLife shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares MBIA and MetLife”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MBIA	$42.00 million	8.39	-$444.00 million	($3.64)	-1.92
MetLife	$70.99 billion	0.73	$4.43 billion	$5.31	14.80

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

Summary

MetLife beats MBIA on 11 of the 15 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 MetLife

MetLife, Inc., a financial services company, provides insurance, annuities, employee benefits, and asset management services worldwide. It operates through six segments: Retirement and Income Solutions; Group Benefits; Asia; Latin America; Europe, the Middle East and Africa; and MetLife Holdings. The company offers life, dental, group short-and long-term disability, individual disability, pet insurance, accidental death and dismemberment, vision, and accident and health coverages, as well as prepaid legal plans; administrative services-only arrangements to employers; and general and separate account, and synthetic guaranteed interest contracts, as well as private floating rate funding agreements. It also provides pension risk transfers, institutional income annuities, structured settlements, and capital markets investment products; and other products and services, such as life insurance products and funding agreements for funding postretirement benefits, as well as company, bank, or trust-owned life insurance used to finance nonqualified benefit programs for executives. In addition, it provides fixed, indexed-linked, and variable annuities; pension products; regular savings products; whole and term life, endowments, universal and variable life, and group life products; longevity reinsurance solutions; credit insurance products; and protection against long-term health care services. MetLife, Inc. was incorporated in 1999 and is based in New York, New York.