Consumer Portfolio Services (NASDAQ: CPSS) and Green Dot Corporation (NYSE:GDOT) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their earnings, profitability, analyst recommendations, valuation, dividends, risk and institutional ownership.

Insider and Institutional Ownership

46.7% of Consumer Portfolio Services shares are held by institutional investors. Comparatively, 77.5% of Green Dot Corporation shares are held by institutional investors. 37.5% of Consumer Portfolio Services shares are held by company insiders. Comparatively, 11.0% of Green Dot Corporation shares are held by company 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.

Analyst Recommendations

This is a summary of current ratings for Consumer Portfolio Services and Green Dot Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Consumer Portfolio Services 0 1 1 0 2.50
Green Dot Corporation 0 4 8 0 2.67

Consumer Portfolio Services presently has a consensus target price of $6.00, suggesting a potential upside of 44.58%. Green Dot Corporation has a consensus target price of $40.00, suggesting a potential downside of 16.27%. Given Consumer Portfolio Services’ higher probable upside, equities research analysts clearly believe Consumer Portfolio Services is more favorable than Green Dot Corporation.

Valuation & Earnings

This table compares Consumer Portfolio Services and Green Dot Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Consumer Portfolio Services $159.50 million 0.59 $19.32 million $0.85 4.88
Green Dot Corporation $792.81 million 3.04 $112.29 million $1.16 41.18

Green Dot Corporation has higher revenue and earnings than Consumer Portfolio Services. Consumer Portfolio Services is trading at a lower price-to-earnings ratio than Green Dot Corporation, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Consumer Portfolio Services has a beta of 1.63, meaning that its share price is 63% more volatile than the S&P 500. Comparatively, Green Dot Corporation has a beta of 1.01, meaning that its share price is 1% more volatile than the S&P 500.

Profitability

This table compares Consumer Portfolio Services and Green Dot Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Consumer Portfolio Services 5.49% 12.76% 0.99%
Green Dot Corporation 7.66% 12.13% 4.83%

Summary

Green Dot Corporation beats Consumer Portfolio Services on 10 of the 14 factors compared between the two stocks.

Consumer Portfolio Services Company Profile

Consumer Portfolio Services, Inc. is a specialty finance company. The Company’s business is to purchase and service retail automobile contracts originated primarily by franchised automobile dealers and by select independent dealers in the United States in the sale of new and used automobiles, light trucks and passenger vans. Through its automobile contract purchases, the Company provides indirect financing to the customers of dealers having limited credit histories, low incomes or past credit problems, who it refers to as sub-prime customers. It serves as an alternative source of financing for dealers, facilitating sales to customers. The Company offers approximately eight financing programs to its dealership customers and prices each program according to the relative credit risk. Its financing programs are Bravo, First Time Buyer, Mercury/Delta, Standard, Alpha, Alpha Plus, Super Alpha and Preferred.

Green Dot Corporation Company Profile

Green Dot Corporation (Green Dot) is a pro-consumer financial technology innovator. The Company is a provider of reloadable prepaid debit cards and cash reload processing services in the United States. The Company operates through two segments: Account Services, and Processing and Settlement Services. The Company’s account services segment includes branded deposit account programs, including Green Dot-branded and affinity-branded general purpose reloadable (GPR) card accounts; checking accounts, open-loop gift cards and secured credit cards. The Company’s processing and settlement services include its money processing services, which consists of reload services and 1099 disbursements, and its tax refund processing services. It also has operations in the mobile technology and mobile banking with GoBank mobile checking account. Through its subsidiary, SBBT Holdings, LLC (TPG), it also operates as a processor of tax refund disbursements in the United States.

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