MGIC Investment (NYSE:MTG – Get Free Report) and Waterdrop (NYSE:WDH – Get Free Report) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, risk, earnings, analyst recommendations, valuation, institutional ownership and profitability.
Profitability
This table compares MGIC Investment and Waterdrop’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| MGIC Investment | 59.63% | 14.01% | 10.96% |
| Waterdrop | 12.47% | 10.87% | 7.94% |
Insider & Institutional Ownership
95.6% of MGIC Investment shares are held by institutional investors. Comparatively, 2.0% of Waterdrop shares are held by institutional investors. 1.3% of MGIC Investment shares are held by company insiders. Comparatively, 24.6% of Waterdrop shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Analyst Recommendations
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| MGIC Investment | 0 | 4 | 1 | 0 | 2.20 |
| Waterdrop | 0 | 2 | 0 | 0 | 2.00 |
MGIC Investment presently has a consensus target price of $28.25, indicating a potential upside of 3.23%. Waterdrop has a consensus target price of $2.00, indicating a potential upside of 82.65%. Given Waterdrop’s higher probable upside, analysts plainly believe Waterdrop is more favorable than MGIC Investment.
Dividends
MGIC Investment pays an annual dividend of $0.60 per share and has a dividend yield of 2.2%. Waterdrop pays an annual dividend of $0.05 per share and has a dividend yield of 4.6%. MGIC Investment pays out 19.0% of its earnings in the form of a dividend. Waterdrop pays out 23.8% 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.
Earnings & Valuation
This table compares MGIC Investment and Waterdrop”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 | 4.77 | $738.35 million | $3.15 | 8.69 |
| Waterdrop | $568.81 million | 0.69 | $81.36 million | $0.21 | 5.21 |
MGIC Investment has higher revenue and earnings than Waterdrop. Waterdrop is trading at a lower price-to-earnings ratio than MGIC Investment, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
MGIC Investment has a beta of 0.68, suggesting that its stock price is 32% less volatile than the S&P 500. Comparatively, Waterdrop has a beta of -0.18, suggesting that its stock price is 118% less volatile than the S&P 500.
Summary
MGIC Investment beats Waterdrop on 14 of the 17 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 Waterdrop
Waterdrop Inc., through its subsidiaries, provides online insurance brokerage services to match and connect users with related insurance products underwritten by insurance companies in the People's Republic of China. The company offers short-term health and long-term health and life insurance products and services. It also operates a medical crowdfunding platform. Waterdrop Inc. was founded in 2016 and is headquartered in Beijing, the People's Republic of China.
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