Critical Analysis: Heritage Global (NASDAQ:HGBL) & MGIC Investment (NYSE:MTG)

Heritage Global (NASDAQ:HGBL) and MGIC Investment (NYSE:MTG) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, earnings, valuation, institutional ownership, risk, profitability and analyst recommendations.

Institutional & Insider Ownership

33.5% of Heritage Global shares are held by institutional investors. Comparatively, 95.6% of MGIC Investment shares are held by institutional investors. 15.6% of Heritage Global shares are held by company insiders. Comparatively, 1.3% of MGIC Investment shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Heritage Global	-29.63%	6.12%	4.69%
MGIC Investment	59.20%	13.90%	10.81%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Heritage Global and MGIC Investment, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Heritage Global	1	0	1	0	2.00
MGIC Investment	0	6	1	1	2.38

Heritage Global presently has a consensus price target of $3.00, suggesting a potential upside of 134.38%. MGIC Investment has a consensus price target of $30.80, suggesting a potential upside of 6.08%. Given Heritage Global’s higher possible upside, equities research analysts clearly believe Heritage Global is more favorable than MGIC Investment.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Heritage Global	$50.98 million	0.87	$3.59 million	($0.41)	-3.12
MGIC Investment	$1.21 billion	4.91	$738.35 million	$3.20	9.07

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

Volatility & Risk

Heritage Global has a beta of 0.48, meaning that its stock price is 52% less volatile than the S&P 500. Comparatively, MGIC Investment has a beta of 0.64, meaning that its stock price is 36% less volatile than the S&P 500.

Summary

MGIC Investment beats Heritage Global on 12 of the 14 factors compared between the two stocks.

About Heritage Global

Heritage Global Inc., together with its subsidiaries, operates as an asset services company with focus on financial and industrial asset transactions. The company operates in three segments: Auction and Liquidation, Refurbishment & Resale, and Brokerage. It provides a suite of market making, acquisitions, refurbishment, dispositions, valuations, and secured lending services. The company focuses on identifying, valuing, acquiring, and monetizing underlying tangible assets. It acts as an adviser, as well as a principal, acquiring, or brokering manufacturing facilities; surplus industrial machinery and equipment; industrial inventories; and charged-off receivable portfolios. The company was formerly known as Counsel RB Capital Inc. and changed its name to Heritage Global, Inc. in August 2013. Heritage Global, Inc. was founded in 1937 and is headquartered in San Diego, California.

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.