Critical Contrast: The PMI Group (OTCMKTS:PPMIQ) & Ambac Financial Group (NYSE:AMBC)

Ambac Financial Group (NYSE:AMBC) and The PMI Group (OTCMKTS:PPMIQ) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, risk, earnings, institutional ownership, valuation, dividends and profitability.

Institutional and Insider Ownership

84.5% of Ambac Financial Group shares are owned by institutional investors. 5.0% of Ambac Financial Group shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Ambac Financial Group and The PMI Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ambac Financial Group	19.27%	10.79%	1.83%
The PMI Group	N/A	N/A	N/A

Earnings & Valuation

This table compares Ambac Financial Group and The PMI Group”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ambac Financial Group	$352.00 million	1.44	$4.00 million	$1.31	8.57
The PMI Group	N/A	N/A	N/A	N/A	N/A

Ambac Financial Group has higher revenue and earnings than The PMI Group.

Analyst Ratings

This is a summary of current ratings for Ambac Financial Group and The PMI Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ambac Financial Group	0	0	2	1	3.33
The PMI Group	0	0	0	0	N/A

Ambac Financial Group currently has a consensus price target of $17.00, indicating a potential upside of 51.38%.

Summary

Ambac Financial Group beats The PMI Group on 8 of the 8 factors compared between the two stocks.

About Ambac Financial Group

Ambac Financial Group, Inc. operates as a financial services holding company. It operates three businesses: Specialty Property and Casualty Insurance, Insurance Distribution, and Legacy Financial Guarantee (LFG) Insurance. The Specialty Property and Casualty Insurance business provides specialty property and casualty program insurance with a focus commercial and personal liability risks. The Insurance Distribution business includes the specialty property and casualty insurance distribution business, which includes managing general agents and underwriters, insurance wholesalers, brokers, and other distribution businesses. The LFG Insurance business offers financial guarantee insurance policies that provide an unconditional and irrevocable guarantee, which protects the holder of a debt obligation against non-payment when due of the principal and interest on the obligations guaranteed. Ambac Financial Group, Inc. was incorporated in 1991 and is headquartered in New York, New York.

About The PMI Group

The PMI Group, Inc. (TPG) through its subsidiary PMI Mortgage Insurance Co. (MIC), and its affiliated companies (collectively PMI), provides residential mortgage insurance in the United States. During the year ended December 31, 2009, the Company operated in three business segments: United States Mortgage Insurance Operations, International Operations and Corporate and Other. As a United States residential mortgage insurer, PMI offers a variety of mortgage insurance products to meet the capital and credit risk mitigation needs of its customers. In November 2011, the Company announced that it has filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware.