Critical Analysis: OneMain Holdings (OMF) and LendingClub Corporation (LC)
OneMain Holdings (NYSE: OMF) and LendingClub Corporation (NYSE:LC) are both mid-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their analyst recommendations, risk, valuation, dividends, profitability, earnings and institutional ownership.
Volatility & Risk
OneMain Holdings has a beta of 2.85, indicating that its stock price is 185% more volatile than the S&P 500. Comparatively, LendingClub Corporation has a beta of 1.86, indicating that its stock price is 86% more volatile than the S&P 500.
Insider & Institutional Ownership
95.5% of OneMain Holdings shares are held by institutional investors. Comparatively, 91.7% of LendingClub Corporation shares are held by institutional investors. 57.7% of OneMain Holdings shares are held by company insiders. Comparatively, 11.4% of LendingClub Corporation shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
This table compares OneMain Holdings and LendingClub Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a breakdown of current recommendations and price targets for OneMain Holdings and LendingClub Corporation, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
OneMain Holdings currently has a consensus target price of $29.06, indicating a potential upside of 5.87%. LendingClub Corporation has a consensus target price of $6.82, indicating a potential upside of 16.92%. Given LendingClub Corporation’s higher possible upside, analysts clearly believe LendingClub Corporation is more favorable than OneMain Holdings.
Earnings and Valuation
This table compares OneMain Holdings and LendingClub Corporation’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|OneMain Holdings||$1.84 billion||2.02||$127.18 million||$0.94||29.20|
|LendingClub Corporation||$511.51 million||4.69||-$123.42 million||($0.30)||-19.43|
OneMain Holdings has higher revenue and earnings than LendingClub Corporation. LendingClub Corporation is trading at a lower price-to-earnings ratio than OneMain Holdings, indicating that it is currently the more affordable of the two stocks.
OneMain Holdings beats LendingClub Corporation on 9 of the 11 factors compared between the two stocks.
About OneMain Holdings
OneMain Holdings, Inc. is a financial services holding company. The Company is a consumer finance company, which is engaged in providing personal loan products; credit and non-credit insurance, and service loans owned by it and service or subservice loans owned by third-parties. The Company’s segments include Consumer and Insurance; Acquisitions and Servicing; Real Estate, and Other. It is engaged in pursuing strategic acquisitions and dispositions of assets and businesses, including loan portfolios or other financial assets. The Company originates and services personal loans (secured and unsecured) through two business divisions: branch operations and centralized operations. As of December 31, 2016, its combined branch operations included over 1,800 branch offices in 44 states. It offers optional credit insurance products to its customers, including credit life insurance, credit disability insurance, credit involuntary unemployment insurance and collateral protection insurance.
About LendingClub Corporation
LendingClub Corporation provides online marketplace to connect borrowers and investors. Consumers and small business owners borrow through Lending Club. Investors use Lending Club to earn risk-adjusted returns from an asset class that has been closed to many investors and only available on a limited basis to large institutional investors. Its technology automates aspects of operations, including the borrower application process, data gathering, credit decisioning and scoring, loan funding, investing and servicing, regulatory compliance and fraud detection. Its platform offers analytical tools and data to enable investors to make decisions and assess their portfolios. Its technology platform has allowed it to expand its offerings from personal loans to include small business loans, and to expand investor classes from individuals to institutions and create various investment vehicles.
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