Walter Investment Management Corp. (NYSE: WAC) and First Bank (NASDAQ:FRBA) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their valuation, earnings, dividends, analyst recommendations, risk, profitability and institutional ownership.

Volatility and Risk

Walter Investment Management Corp. has a beta of 0.6, meaning that its share price is 40% less volatile than the S&P 500. Comparatively, First Bank has a beta of 0.56, meaning that its share price is 44% less volatile than the S&P 500.

Institutional and Insider Ownership

62.2% of Walter Investment Management Corp. shares are owned by institutional investors. Comparatively, 29.3% of First Bank shares are owned by institutional investors. 50.1% of Walter Investment Management Corp. shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Walter Investment Management Corp. and First Bank’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Walter Investment Management Corp. $947.12 million 0.01 -$217.78 million ($5.96) -0.05
First Bank $31.35 million 5.89 $9.61 million $0.64 19.22

First Bank has higher revenue, but lower earnings than Walter Investment Management Corp.. Walter Investment Management Corp. is trading at a lower price-to-earnings ratio than First Bank, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Walter Investment Management Corp. and First Bank, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Walter Investment Management Corp. 1 1 0 0 1.50
First Bank 0 0 1 0 3.00

Walter Investment Management Corp. presently has a consensus price target of $1.13, suggesting a potential upside of 261.62%. First Bank has a consensus price target of $14.00, suggesting a potential upside of 13.82%. Given Walter Investment Management Corp.’s higher possible upside, analysts plainly believe Walter Investment Management Corp. is more favorable than First Bank.

Profitability

This table compares Walter Investment Management Corp. and First Bank’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Walter Investment Management Corp. -18.10% -75.98% -0.52%
First Bank 17.19% N/A N/A

Dividends

First Bank pays an annual dividend of $0.08 per share and has a dividend yield of 0.7%. Walter Investment Management Corp. does not pay a dividend. First Bank pays out 12.5% of its earnings in the form of a dividend.

Summary

First Bank beats Walter Investment Management Corp. on 9 of the 15 factors compared between the two stocks.

Walter Investment Management Corp. Company Profile

Walter Investment Management Corp. is a diversified mortgage banking firm focused primarily on the servicing and origination of residential loans, including reverse loans. The Company operates through three segments: Servicing, Originations and Reverse Mortgage. The Servicing segment consists of operations that perform servicing for third-party credit owners of mortgage loans, as well as its own mortgage loan portfolio. The Servicing segment also includes Insurance, and Loans and Residuals businesses. The Originations segment consists of operations that originate and purchase mortgage loans that are intended for sale to third parties. The Reverse Mortgage segment consists of operations which purchases and originates home equity conversion mortgage that are securitized, but remain on the consolidated balance sheet as collateral for secured borrowings.

First Bank Company Profile

First Bank is a commercial bank. The Company provides a range of lending, deposit and other financial products and services. It operates through Community Banking segment, which is engaged in providing a range of commercial and retail and related banking services. It offers a range of lending products to meet the needs of its customers located within its market areas, including commercial and industrial loans, commercial real estate loans (including owner-occupied, investor, construction and development and multi-family loans), residential real estate loans, and consumer and other loans. It offers a range of deposit instruments, including non-interest bearing demand deposits (such as checking accounts), interest bearing demand accounts, money market accounts, savings accounts and certificates of deposit. It operates over 10 branches located in Cranbury, Denville, Ewing, Flemington, Hamilton, Lawrence, Somerset, Randolph and Williamstown, New Jersey, and Trevose, Pennsylvania.

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