Financial Analysis: Octave Specialty Group (NYSE:OSG) versus Loews (NYSE:L)

Loews (NYSE:L) and Octave Specialty Group (NYSE:OSG) are both finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their valuation, profitability, institutional ownership, analyst recommendations, risk, earnings and dividends.

Risk & Volatility

Loews has a beta of 0.51, suggesting that its stock price is 49% less volatile than the S&P 500. Comparatively, Octave Specialty Group has a beta of 0.83, suggesting that its stock price is 17% less volatile than the S&P 500.

Institutional and Insider Ownership

58.3% of Loews shares are held by institutional investors. Comparatively, 80.9% of Octave Specialty Group shares are held by institutional investors. 19.0% of Loews shares are held by company insiders. Comparatively, 7.2% of Octave Specialty Group shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Loews and Octave Specialty Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Loews	9.02%	8.60%	1.96%
Octave Specialty Group	-51.10%	0.44%	0.17%

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Loews and Octave Specialty Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Loews	0	0	0	1	4.00
Octave Specialty Group	1	2	2	0	2.20

Octave Specialty Group has a consensus price target of $11.50, indicating a potential upside of 131.39%. Given Octave Specialty Group’s higher probable upside, analysts clearly believe Octave Specialty Group is more favorable than Loews.

Valuation and Earnings

This table compares Loews and Octave Specialty Group”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Loews	$18.45 billion	1.21	$1.67 billion	$8.16	13.38
Octave Specialty Group	$251.22 million	0.89	-$261.69 million	($3.65)	-1.36

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

Summary

Loews beats Octave Specialty Group on 11 of the 15 factors compared between the two stocks.

About Loews

Loews Corporation provides commercial property and casualty insurance in the United States and internationally. The company offers specialty insurance products, such as management and professional liability, and other coverage products; surety and fidelity bonds; property insurance products that include standard and excess property, marine and boiler, and machinery coverages; and casualty insurance products, such as workers' compensation, general and product liability, and commercial auto, surplus, and umbrella coverages. It also provides loss-sensitive insurance programs; and warranty, risk management, information, and claims administration services. The company markets its insurance products and services through independent agents, brokers, and managing general underwriters. In addition, the company is involved in the transportation and storage of natural gas and natural gas liquids, and hydrocarbons through natural gas pipelines covering approximately 13,455 miles of interconnected pipelines; 855 miles of NGL pipelines in Louisiana and Texas; 14 underground storage fields with an aggregate gas capacity of approximately 199.5 billion cubic feet of natural gas; and eleven salt dome caverns and related brine infrastructure for providing brine supply services. Further, the company operates a chain of 25 hotels; and develops, manufactures, and markets a range of extrusion blow-molded and injection molded plastic containers for customers in the pharmaceutical, dairy, household chemicals, food/nutraceuticals, industrial/specialty chemicals, and water and beverage/juice industries, as well as manufactures commodity and differentiated plastic resins from recycled plastic materials. Loews Corporation was incorporated in 1969 and is headquartered in New York, New York.

About Octave Specialty 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.