Federal Agricultural Mortgage Corp. (NYSE: AGM.A) and NewStar Financial (NASDAQ:NEWS) are both financials companies, but which is the better business? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, earnings, dividends, profitabiliy and analyst recommendations.

Valuation and Earnings

This table compares Federal Agricultural Mortgage Corp. and NewStar Financial’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Federal Agricultural Mortgage Corp. N/A N/A N/A N/A N/A
NewStar Financial $99.47 million 4.66 $23.56 million $0.56 19.68

NewStar Financial has higher revenue and earnings than Federal Agricultural Mortgage Corp..

Profitability

This table compares Federal Agricultural Mortgage Corp. and NewStar Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Federal Agricultural Mortgage Corp. 24.06% 16.60% 0.56%
NewStar Financial 8.98% 3.91% 0.62%

Dividends

NewStar Financial pays an annual dividend of $0.08 per share and has a dividend yield of 0.7%. Federal Agricultural Mortgage Corp. does not pay a dividend. NewStar Financial pays out 14.3% of its earnings in the form of a dividend.

Analyst Ratings

This is a summary of current ratings and recommmendations for Federal Agricultural Mortgage Corp. and NewStar Financial, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Federal Agricultural Mortgage Corp. 0 0 0 0 N/A
NewStar Financial 0 1 0 0 2.00

NewStar Financial has a consensus target price of $11.00, suggesting a potential downside of 0.18%.

Insider & Institutional Ownership

73.6% of NewStar Financial shares are owned by institutional investors. 8.1% of NewStar Financial shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

NewStar Financial beats Federal Agricultural Mortgage Corp. on 5 of the 8 factors compared between the two stocks.

Federal Agricultural Mortgage Corp. Company Profile

Federal Agricultural Mortgage Corporation (Farmer Mac) provides a secondary market for a range of loans made to borrowers in rural America. The Company’s segments include Farm & Ranch, USDA Guarantees, Rural Utilities, Institutional Credit and Corporate. Its secondary market activities are purchasing eligible loans directly from lenders; providing advances against eligible loans by purchasing obligations secured by those loans; securitizing assets and guaranteeing the payment of principal and interest on the resulting securities that represent interests in, or obligations secured by, pools of eligible loans; and issuing long-term standby purchase commitments (LTSPCs) for eligible loans. The loans eligible for the secondary market provided by Farmer Mac include mortgage loans secured by first liens on agricultural real estate, including part-time farms and rural housing (comprising the assets eligible for the Farm & Ranch line of business).

NewStar Financial Company Profile

NewStar Financial, Inc. (NewStar) is a commercial finance company. The Company operates through two segments: Commercial Lending and Asset Management. The Commercial Lending segment represents its direct lending activities, which are focused on providing a range of flexible senior secured debt options to mid-sized companies. The Asset Management segment represents its investment advisory activities, which are focused on providing opportunities for qualified investors to invest in a range of credit funds managed by the Company. The Company’s direct lending activities are focused on meeting the financial needs of companies and private investors in the middle market by offering a range of debt financing options. Through its asset management platforms, NewStar offers a range of investment products employing credit-oriented strategies focused on middle market loans and liquid, tradeable credit.

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