Stonegate Mortgage (NYSE: SGM) and Regional Management (NYSE:RM) are both small-cap consumer lending – nec companies, but which is the better stock? We will contrast the two companies based on the strength of their earnings, institutional ownership, valuation, risk, dividends, profitability and analyst recommendations.
Volatility and Risk
Stonegate Mortgage has a beta of 1.45, suggesting that its share price is 45% more volatile than the S&P 500. Comparatively, Regional Management has a beta of 1.38, suggesting that its share price is 38% more volatile than the S&P 500.
44.3% of Stonegate Mortgage shares are owned by institutional investors. Comparatively, 86.4% of Regional Management shares are owned by institutional investors. 44.5% of Stonegate Mortgage shares are owned by insiders. Comparatively, 9.5% of Regional Management shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
This is a summary of recent ratings and recommmendations for Stonegate Mortgage and Regional Management, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Regional Management has a consensus target price of $26.40, indicating a potential upside of 0.34%. Given Regional Management’s higher probable upside, analysts clearly believe Regional Management is more favorable than Stonegate Mortgage.
Earnings and Valuation
This table compares Stonegate Mortgage and Regional Management’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Regional Management||$240.52 million||1.28||$24.03 million||$2.17||12.12|
Regional Management has higher revenue and earnings than Stonegate Mortgage. Stonegate Mortgage is trading at a lower price-to-earnings ratio than Regional Management, indicating that it is currently the more affordable of the two stocks.
This table compares Stonegate Mortgage and Regional Management’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Regional Management beats Stonegate Mortgage on 9 of the 11 factors compared between the two stocks.
About Stonegate Mortgage
Stonegate Mortgage Corporation is a non-bank mortgage company. The Company is focused on originating, financing and servicing the United States residential mortgage loans. The Company’s segments include Originations, Servicing, Financing and Other. The Originations segment primarily originates and sells residential mortgage loans, which conform to the underwriting guidelines of the government sponsored enterprises and government agencies, and non-agency whole loan investors. The Servicing segment includes loan administration, collection and default activities, including the collection and remittance of loan payments, responding to customer inquiries, collection of principal and interest payments, holding custodial funds for the payment of property taxes and insurance premiums, counseling delinquent mortgagors and modifying loans. The Financing segment includes warehouse-lending activities to correspondent customers by the Company’s subsidiary, NattyMac, LLC.
About Regional Management
Regional Management Corp. is a diversified consumer finance company. The Company provides an array of loan products primarily to customers with limited access to consumer credit from banks, thrifts, credit card companies and other traditional lenders. Its products include small loans, large loans, automobile loans, retail loans, and optional payment and collateral protection insurance products. It offers small loans ranging from $500 to $2,500, through its branches. It offers large installment loans with cash proceeds to the customer ranging from $2,501 to $20,000. As of December 31, 2016, automobile loans were offered in amounts up to $27,500. As of December 31, 2016, retail loans were indirect installment loans structured as retail installment sales contracts that were offered in amounts of up to $7,500. Optional Payment and Collateral Protection Insurance Products offer customers a number of optional payment and collateral protection insurance products.
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