Contrasting MGIC Investment (NYSE:MTG) & StoneCo (NASDAQ:STNE)

StoneCo (NASDAQ:STNE) and MGIC Investment (NYSE:MTG) are both mid-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, profitability, valuation, institutional ownership, earnings, dividends and risk.

Insider & Institutional Ownership

73.2% of StoneCo shares are owned by institutional investors. Comparatively, 95.6% of MGIC Investment shares are owned by institutional investors. 1.3% of MGIC Investment shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares StoneCo and MGIC Investment”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
StoneCo	$2.53 billion	0.98	$425.73 million	$2.48	4.00
MGIC Investment	$1.21 billion	5.21	$738.35 million	$3.20	9.63

MGIC Investment has lower revenue, but higher earnings 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.

Analyst Recommendations

This is a summary of recent ratings and price targets for StoneCo and MGIC Investment, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
StoneCo	0	6	4	0	2.40
MGIC Investment	0	4	1	2	2.71

StoneCo currently has a consensus price target of $14.30, indicating a potential upside of 44.01%. MGIC Investment has a consensus price target of $30.60, indicating a potential downside of 0.73%. Given StoneCo’s higher possible upside, research analysts clearly believe StoneCo is more favorable than MGIC Investment.

Profitability

This table compares StoneCo and MGIC Investment’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
StoneCo	22.92%	22.19%	4.10%
MGIC Investment	59.20%	13.90%	10.81%

Risk & Volatility

StoneCo has a beta of 1.75, indicating that its stock price is 75% more volatile than the S&P 500. Comparatively, MGIC Investment has a beta of 0.65, indicating that its stock price is 35% less volatile than the S&P 500.

Summary

MGIC Investment beats StoneCo on 10 of the 15 factors compared between the two stocks.

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.

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.