Arlington Asset Investment Corp (NYSE: AI) and Marlin Business Services Corp. (NASDAQ:MRLN) are both small-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their earnings, analyst recommendations, institutional ownership, dividends, risk, valuation and profitabiliy.

Institutional and Insider Ownership

43.3% of Arlington Asset Investment Corp shares are owned by institutional investors. Comparatively, 77.9% of Marlin Business Services Corp. shares are owned by institutional investors. 2.7% of Arlington Asset Investment Corp shares are owned by company insiders. Comparatively, 10.7% of Marlin Business Services Corp. shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

Arlington Asset Investment Corp pays an annual dividend of $2.50 per share and has a dividend yield of 17.1%. Marlin Business Services Corp. pays an annual dividend of $0.56 per share and has a dividend yield of 2.2%. Arlington Asset Investment Corp pays out -1,250.0% of its earnings in the form of a dividend. Marlin Business Services Corp. pays out 46.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Arlington Asset Investment Corp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

Arlington Asset Investment Corp has a beta of 1.12, suggesting that its stock price is 12% more volatile than the S&P 500. Comparatively, Marlin Business Services Corp. has a beta of 1.35, suggesting that its stock price is 35% more volatile than the S&P 500.

Profitability

This table compares Arlington Asset Investment Corp and Marlin Business Services Corp.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Arlington Asset Investment Corp -4.51% -1.78% -0.17%
Marlin Business Services Corp. 15.07% 11.19% 2.02%

Valuation and Earnings

This table compares Arlington Asset Investment Corp and Marlin Business Services Corp.’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Arlington Asset Investment Corp $53.14 million 6.52 -$4.73 million ($0.20) -73.30
Marlin Business Services Corp. $82.73 million 3.77 $14.84 million $1.21 20.99

Marlin Business Services Corp. has higher revenue and earnings than Arlington Asset Investment Corp. Arlington Asset Investment Corp is trading at a lower price-to-earnings ratio than Marlin Business Services Corp., indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current recommendations for Arlington Asset Investment Corp and Marlin Business Services Corp., as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Arlington Asset Investment Corp 0 2 1 0 2.33
Marlin Business Services Corp. 0 0 1 0 3.00

Arlington Asset Investment Corp currently has a consensus target price of $16.00, suggesting a potential upside of 9.14%. Marlin Business Services Corp. has a consensus target price of $29.00, suggesting a potential upside of 14.17%. Given Marlin Business Services Corp.’s stronger consensus rating and higher possible upside, analysts clearly believe Marlin Business Services Corp. is more favorable than Arlington Asset Investment Corp.

Summary

Marlin Business Services Corp. beats Arlington Asset Investment Corp on 11 of the 14 factors compared between the two stocks.

Arlington Asset Investment Corp Company Profile

Arlington Asset Investment Corp. is an investment company. The Company focuses on acquiring and holding a levered portfolio of residential mortgage-backed securities (MBS), consisting of agency MBS and private-label MBS. Agency MBS include residential mortgage pass-through certificates for which the principal and interest payments are guaranteed by a United States Government agency or government-sponsored enterprise (GSE), such as the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). Private-label MBS, or non-agency MBS, include residential MBS that are not guaranteed by a GSE or the United States Government. The Company funds its investments primarily through short-term financing arrangements. The Company purchases agency MBS either in initial offerings or in the secondary market through broker-dealers or similar entities. It may invest in agency MBS collateralized by adjustable-rate mortgage loans (ARMs) or hybrid ARMs.

Marlin Business Services Corp. Company Profile

Marlin Business Services Corp. is a bank holding company and a financial holding company. The Company is a provider of credit products and services to small businesses. The Company provides products and services to its customers, which include loans and leases for the acquisition of commercial equipment, working capital loans, and insurance products. The Company accesses its end user customers primarily through origination sources consisting of independent commercial equipment dealers, various national account programs, through direct solicitation of its end user customers, and through relationships with select lease and loan brokers. The Company uses both a telephonic direct sales model and, for strategic larger accounts, outside sales executives to market to its origination sources and end user customers. Through these origination sources, the Company accesses end user customers while also helping its origination sources obtain financing for their customers.

Receive News & Ratings for Arlington Asset Investment Corp Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Arlington Asset Investment Corp and related companies with MarketBeat.com's FREE daily email newsletter.