Ambac Financial (AMBC) AI Stock Analysis

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Ambac Financial

(NYSE:AMBC)

60Neutral

Ambac Financial's stock score reflects a challenging financial environment marked by significant losses and revenue instability. Despite these issues, the company has made strategic moves, such as eliminating debt and achieving growth in its P&C business, which are encouraging. The technical analysis suggests some short-term momentum, yet long-term indicators remain concerning. Valuation is a bright spot with a low P/E ratio, indicating potential undervaluation. Overall, while there are positive developments, financial vulnerabilities and a lack of dividends weigh on the outlook.

Ambac Financial (AMBC) vs. S&P 500 (SPY)

Market Cap

$414.35M

Dividend YieldN/A

Average Volume (3M)1.02M

Price to Earnings (P/E)5.6

Beta (1Y)1.00

Revenue Growth46.32%

EPS Growth640.18%

CountryUS

Employees380

SectorFinancial

Sector Strength88

IndustryInsurance - Specialty

Share Statistics

EPS (TTM)-0.12

Shares Outstanding51,091,190

10 Day Avg. Volume676,082

30 Day Avg. Volume1,023,258

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap2.70

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit4.75

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$15.00

Price Target Upside82.70% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering1

Ambac Financial Business Overview & Revenue Model

Company DescriptionAmbac Financial Group, Inc., a financial services holding company, provides financial guarantees in the United States, the United Kingdom, Italy, Austria, Australia, France, and Internationally. It offers financial guarantee insurance policies; specialty property & casualty program insurance; credit derivative contracts; and interest rate derivative transactions, as well as managing general agency / underwriting services. The company was incorporated in 1991 and is headquartered in New York, New York.

How the Company Makes MoneyAmbac Financial Group makes money by providing financial guarantee insurance, where it guarantees the timely payment of principal and interest on insured obligations when the issuer defaults. This service allows issuers to achieve better credit ratings and lower borrowing costs, for which Ambac charges premiums. These premiums constitute the primary revenue stream for the company. Additionally, Ambac may earn investment income from its investment portfolio, which includes the premiums received and other capital. The company's revenue can be influenced by factors such as the volume of new business underwritten, the performance of insured obligations, and interest rate movements. Ambac's financial performance can also be impacted by its ability to manage risk and maintain strong credit ratings.

Ambac Financial Financial Statement Overview

Summary

Ambac Financial faces substantial financial challenges, characterized by significant net losses, declining revenues, and weakened cash flow. While the elimination of debt is a positive step, the low equity ratio and poor cash flow metrics highlight vulnerabilities. The company must focus on stabilizing revenue and improving profitability to enhance its financial health.

Income Statement

Negative

Ambac Financial's income statement reveals significant challenges. The company experienced a dramatic net loss in 2024, with a negative net profit margin of -235.9%, down from a modest profit in 2023. Revenue growth has been erratic, with a decrease of 12.3% in 2024 following a decline from 2022 to 2023. The absence of EBIT and EBITDA in 2024 further highlights operational difficulties.

Balance Sheet

Neutral

The balance sheet shows a decrease in stockholders' equity, reducing from $1.36 billion in 2023 to $379 million in 2024, indicating a weakened equity position. However, the company has removed its debt obligations, improving its debt-to-equity ratio from high levels in previous years. Despite this, the equity ratio is relatively low at 6.1%, suggesting potential financial instability.

Cash Flow

Negative

Cash flow analysis shows a sharp decline in operating cash flow from $200 million in 2023 to $762,000 in 2024, illustrating cash generation issues. The free cash flow has also deteriorated, reflected in a negligible free cash flow growth rate. The operating cash flow to net income ratio is unfavorable, reflecting poor cash conversion efficiency.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
235.81M	269.00M	424.00M	250.00M	156.00M
	Gross Profit
235.81M	269.00M	424.00M	250.00M	156.00M
	EBIT
0.00	113.00M	695.00M	-31.00M	-448.00M
	EBITDA
-30.52M	107.00M	742.00M	246.00M	-160.00M
	Net Income Common Stockholders
-556.45M	4.00M	521.00M	-16.00M	-437.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
8.32M	28.00M	1.93B	1.85B	2.83B
	Total Assets
8.06B	8.43B	7.97B	12.30B	13.22B
	Total Debt
150.00M	3.48B	3.75B	6.45B	7.23B
	Net Debt
-8.32M	3.46B	3.72B	6.43B	7.21B
	Total Liabilities
6.86B	7.00B	6.65B	11.19B	12.07B
	Stockholders Equity
379.51M	1.36B	1.25B	1.04B	1.08B
Cash Flow		Free Cash Flow
762.00K	200.00M	1.33B	-131.00M	-353.00M
	Operating Cash Flow
762.00K	200.00M	1.33B	-131.00M	-175.00M
	Investing Cash Flow
-246.30M	435.00M	866.00M	776.00M	432.00M
	Financing Cash Flow
194.22M	-423.00M	-2.16B	-657.00M	-303.00M

Ambac Financial Technical Analysis

Technical Analysis Sentiment

Positive

Last Price8.21

Price Trends

50DMA

8.11

Positive

100DMA

9.95

Negative

200DMA

10.82

Negative

Market Momentum

MACD

0.02

Negative

RSI

56.37

Neutral

STOCH

35.04

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AMBC, the sentiment is Positive. The current price of 8.21 is above the 20-day moving average (MA) of 7.68, above the 50-day MA of 8.11, and below the 200-day MA of 10.82, indicating a neutral trend. The MACD of 0.02 indicates Negative momentum. The RSI at 56.37 is Neutral, neither overbought nor oversold. The STOCH value of 35.04 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AMBC.

Ambac Financial Risk Analysis

Ambac Financial disclosed 53 risk factors in its most recent earnings report. Ambac Financial reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Ambac Financial Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MTG	79 Outperform	$6.18B	8.66	15.12%	1.93%	4.64%	15.36%
RDN	78 Outperform	$4.51B	8.62	13.22%	2.95%	2.95%	4.08%
ESNT	78 Outperform	$6.00B	8.54	13.29%	1.96%	11.88%	5.54%
AGO	66 Neutral	$4.45B	12.81	7.90%	1.45%	-4.43%	-45.42%
Sector *	64 Neutral	$12.58B	9.71	7.88%	16985.68%	12.28%	-5.68%
AMBC	60 Neutral	$414.35M	5.59	2.04%	―	46.32%	640.18%
MBI	28 Underperform	$233.72M	―	26.69%	―	583.33%	6.59%

* Financial Sector Average

Performance Comparison

AMBC

Ambac Financial

8.21

-9.78

-54.36%

AGO

Assured Guaranty

87.40

10.22

13.24%

MBI

MBIA

4.30

-1.66

-27.85%

MTG

MGIC Investment

26.17

5.53

26.79%

RDN

Radian Group

33.53

3.01

9.86%

ESNT

Essent Group

58.53

3.30

5.98%

Ambac Financial Earnings Call Summary

Earnings Call Date:Feb 26, 2025

(Q4-2024)

% Change Since: -29.59%|

Next Earnings Date:May 12, 2025

Earnings Call Sentiment Neutral

Ambac experienced significant growth in its P&C business and completed a transformative acquisition, but faced challenges with a substantial loss from the sale of its legacy business and softness in the A&H market. Overall, the positive growth metrics are balanced by significant financial challenges.

Q4-2024 Updates

Positive Updates

Significant Growth in P&C Business

Ambac's P&C business generated nearly $900 million of premiums, up 74% from 2023, and produced $236 million of revenue, which was up 89% from the prior year.

Acquisition of Beat

The acquisition of Beat was a transformative deal that brought immediate scale to Ambac's distribution platform, expected to deliver strong organic growth.

Successful Sale of Legacy Financial Guarantee Business

Ambac successfully sold its legacy financial guarantee business to Oaktree for $420 million, allowing for accelerated scaling of the Specialty P&C business.

Cirrata Revenue Growth

Cirrata generated nearly $100 million in revenue for 2024, up 93%, with a 20% adjusted EBITDA margin.

Everspan's Improved Performance

Everspan's gross premium written grew by 40% to over $380 million, with a combined ratio improvement of 500 basis points over 2023.

Negative Updates

Net Loss from Discontinued Operations

Ambac recorded a $570 million loss on the sale of the legacy financial guarantee business, resulting in a net loss of $548 million for the fourth quarter.

Softness in A&H Market

The A&H segment, particularly Employer Stop Loss and short-term medical, experienced softness due to macroeconomic trends.

Negative Net Premiums Written

Everspan's net premiums written were negative $3 million in the quarter due to non-renewal of a personal alliance NSA reinsurance program.

Company Guidance

In the Ambac Financial Group's fourth quarter 2024 earnings call, the company reported significant growth and strategic advancements. The P&C business generated nearly $900 million in premiums, marking a 74% increase from 2023, and $236 million in revenue, up 89% from the previous year. Cirrata's revenue surged by 93% to $100 million, with an adjusted EBITDA of $20 million and a margin of 20%. Everspan's gross premium written rose to over $380 million, a 40% increase, with a combined ratio improvement to 101.6%. The company highlighted the transformative acquisition of Beat, the sale of its legacy financial guarantee business for $420 million, and robust market conditions supporting its growth strategies. Managed capacity for 2025 was reported at over $1.5 billion, bolstered by a diversified panel of insurers. Despite a net loss of $548 million due to the legacy business sale, Ambac remains focused on achieving its long-term goals of strong organic growth and significant adjusted EBITDA by 2028.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.