Regional Management Corp. (NYSE: RM) and World Acceptance Corporation (NASDAQ:WRLD) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, dividends, profitabiliy, analyst recommendations, valuation, institutional ownership and earnings.

Insider & Institutional Ownership

88.5% of Regional Management Corp. shares are held by institutional investors. Comparatively, 98.5% of World Acceptance Corporation shares are held by institutional investors. 9.5% of Regional Management Corp. shares are held by company insiders. Comparatively, 28.2% of World Acceptance Corporation shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Regional Management Corp. and World Acceptance Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Regional Management Corp. 0 4 1 0 2.20
World Acceptance Corporation 3 0 0 0 1.00

Regional Management Corp. presently has a consensus target price of $26.20, indicating a potential upside of 7.16%. World Acceptance Corporation has a consensus target price of $52.33, indicating a potential downside of 31.00%. Given Regional Management Corp.’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Regional Management Corp. is more favorable than World Acceptance Corporation.

Valuation & Earnings

This table compares Regional Management Corp. and World Acceptance Corporation’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Regional Management Corp. $239.24 million 1.19 $67.52 million $2.25 10.87
World Acceptance Corporation $531.73 million 1.24 $142.91 million $8.39 9.04

World Acceptance Corporation has higher revenue and earnings than Regional Management Corp.. World Acceptance Corporation is trading at a lower price-to-earnings ratio than Regional Management Corp., indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Regional Management Corp. and World Acceptance Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Regional Management Corp. 10.61% 13.37% 3.98%
World Acceptance Corporation 13.84% 17.26% 8.95%

Risk and Volatility

Regional Management Corp. has a beta of 1.35, meaning that its stock price is 35% more volatile than the S&P 500. Comparatively, World Acceptance Corporation has a beta of 2.34, meaning that its stock price is 134% more volatile than the S&P 500.

Summary

World Acceptance Corporation beats Regional Management Corp. on 10 of the 14 factors compared between the two stocks.

Regional Management Corp. Company Profile

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.

World Acceptance Corporation Company Profile

World Acceptance Corporation operates a small-loan consumer finance business in 15 states and Mexico as of March 31, 2016. The Company offers short-term small installment loans, medium-term larger installment loans, related credit insurance and ancillary products and services to individuals. The Company offers standardized installment loans generally between $300 and $4,000 through 1,339 branches in Alabama, Georgia, Idaho, Illinois, Indiana, Kentucky, Louisiana, Mississippi, Missouri, New Mexico, Oklahoma, South Carolina, Texas, Tennessee, Wisconsin and Mexico as of March 31, 2016. The Company generally serves individuals with limited access to other sources of consumer credit, such as banks, credit unions, other consumer finance businesses and credit card lenders. In the United States branches, the Company also offers income tax return preparation services to its loan customers and other individuals.

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