FirstCash (NASDAQ: FCFS) and Stonegate Mortgage Corp (NYSE:SGM) are both financials companies, but which is the superior investment? We will compare the two companies based on the strength of their analyst recommendations, earnings, institutional ownership, valuation, profitabiliy, risk and dividends.

Institutional & Insider Ownership

44.3% of Stonegate Mortgage Corp shares are owned by institutional investors. 44.5% of Stonegate Mortgage Corp shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Volatility & Risk

FirstCash has a beta of 0.9, indicating that its share price is 10% less volatile than the S&P 500. Comparatively, Stonegate Mortgage Corp has a beta of 1.48, indicating that its share price is 48% more volatile than the S&P 500.

Valuation and Earnings

This table compares FirstCash and Stonegate Mortgage Corp’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
FirstCash $1.35 billion 1.99 $223.52 million $1.97 28.27
Stonegate Mortgage Corp $189.69 million 1.09 -$38.52 million ($1.49) -5.36

FirstCash has higher revenue and earnings than Stonegate Mortgage Corp. Stonegate Mortgage Corp is trading at a lower price-to-earnings ratio than FirstCash, indicating that it is currently the more affordable of the two stocks.

Dividends

FirstCash pays an annual dividend of $0.50 per share and has a dividend yield of 0.9%. Stonegate Mortgage Corp does not pay a dividend. FirstCash pays out 25.4% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of current ratings for FirstCash and Stonegate Mortgage Corp, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
FirstCash 0 2 3 0 2.60
Stonegate Mortgage Corp 0 1 2 0 2.67

FirstCash currently has a consensus target price of $53.83, indicating a potential downside of 3.35%. Stonegate Mortgage Corp has a consensus target price of $6.00, indicating a potential downside of 24.91%. Given FirstCash’s higher possible upside, equities analysts plainly believe FirstCash is more favorable than Stonegate Mortgage Corp.

Profitability

This table compares FirstCash and Stonegate Mortgage Corp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
FirstCash 7.29% 8.92% 6.25%
Stonegate Mortgage Corp -13.22% -6.70% -1.57%

Summary

FirstCash beats Stonegate Mortgage Corp on 11 of the 16 factors compared between the two stocks.

FirstCash Company Profile

FirstCash, Inc., formerly First Cash Financial Services, Inc., is an operator of retail-based pawn stores in the United States and Latin America. The Company’s primary business is the operation of full-service pawn stores, which make small pawn loans secured by personal property, such as consumer electronics, jewelry, power tools, household appliances, sporting goods and musical instruments. The Company’s operates through two segments: the U.S. operations segment and the Latin America operations segment. The U.S. operations segment consists of all pawn and consumer loan operations in the United States and the Latin America operations segment consists of all pawn and consumer loan operations in Latin America, which includes operations in Mexico, Guatemala and El Salvador. In addition, some of the Company’s pawn stores offer small unsecured consumer loans or credit services products. The Company also operates consumer finance stores in Texas and Mexico.

Stonegate Mortgage Corp Company Profile

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.

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