Walter Investment Management Corp. (NYSE: WAC) and People’s United Financial (NASDAQ:PBCT) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their risk, analyst recommendations, dividends, valuation, profitability, earnings and institutional ownership.

Earnings & Valuation

This table compares Walter Investment Management Corp. and People’s United Financial’s revenue, earnings per share 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) -0.06
People’s United Financial $1.34 billion 4.18 $300.38 million $0.89 18.63

People’s United Financial has higher revenue and earnings than Walter Investment Management Corp.. Walter Investment Management Corp. is trading at a lower price-to-earnings ratio than People’s United Financial, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Walter Investment Management Corp. has a beta of 0.6, suggesting that its stock price is 40% less volatile than the S&P 500. Comparatively, People’s United Financial has a beta of 0.82, suggesting that its stock price is 18% less volatile than the S&P 500.

Insider & Institutional Ownership

62.2% of Walter Investment Management Corp. shares are owned by institutional investors. Comparatively, 75.0% of People’s United Financial shares are owned by institutional investors. 46.6% of Walter Investment Management Corp. shares are owned by company insiders. Comparatively, 2.7% of People’s United Financial shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Walter Investment Management Corp. and People’s United Financial’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%
People’s United Financial 18.88% 6.14% 0.75%

Analyst Recommendations

This is a summary of recent ratings for Walter Investment Management Corp. and People’s United Financial, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Walter Investment Management Corp. 1 1 0 0 1.50
People’s United Financial 2 9 0 0 1.82

Walter Investment Management Corp. presently has a consensus price target of $1.13, indicating a potential upside of 223.46%. People’s United Financial has a consensus price target of $18.31, indicating a potential upside of 10.41%. Given Walter Investment Management Corp.’s higher possible upside, research analysts plainly believe Walter Investment Management Corp. is more favorable than People’s United Financial.

Dividends

People’s United Financial pays an annual dividend of $0.69 per share and has a dividend yield of 4.2%. Walter Investment Management Corp. does not pay a dividend. People’s United Financial pays out 77.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Walter Investment Management Corp. has increased its dividend for 10 consecutive years.

Summary

People’s United Financial beats Walter Investment Management Corp. on 11 of the 15 factors compared between the two stocks.

About Walter Investment Management Corp.

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.

About People’s United Financial

People’s United Financial, Inc. is a bank holding company and a financial holding company of People’s United Bank (the Bank). The Bank is engaged in providing commercial banking, retail banking and wealth management services to individual, corporate and municipal customers. The Company operates through two segments: Commercial Banking and Retail Banking. Commercial Banking segment is engaged in commercial real estate lending, commercial and industrial lending, and commercial deposit gathering activities. It offers cash management, correspondent banking, municipal banking, institutional trust services, corporate trust, insurance services and private banking, among others. Retail Banking segment provides consumer lending (including residential mortgage and home equity lending) and consumer deposit gathering activities. The Retail Banking segment also includes brokerage, financial advisory services, investment management services, and life insurance and non-institutional trust services.

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