Nationstar Mortgage Holdings (NYSE: NSM) and Altisource Portfolio Solutions (NASDAQ:ASPS) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, earnings, analyst recommendations, valuation and risk.

Insider & Institutional Ownership

99.0% of Nationstar Mortgage Holdings shares are held by institutional investors. Comparatively, 54.9% of Altisource Portfolio Solutions shares are held by institutional investors. 0.8% of Nationstar Mortgage Holdings shares are held by insiders. Comparatively, 6.8% of Altisource Portfolio Solutions shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Nationstar Mortgage Holdings and Altisource Portfolio Solutions’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Nationstar Mortgage Holdings 10.52% 9.64% 0.87%
Altisource Portfolio Solutions 0.60% 82.95% 8.76%

Earnings & Valuation

This table compares Nationstar Mortgage Holdings and Altisource Portfolio Solutions’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Nationstar Mortgage Holdings $1.42 billion 1.26 $223.77 million $2.29 8.02
Altisource Portfolio Solutions $982.54 million 0.50 $148.76 million $0.28 96.54

Nationstar Mortgage Holdings has higher revenue and earnings than Altisource Portfolio Solutions. Nationstar Mortgage Holdings is trading at a lower price-to-earnings ratio than Altisource Portfolio Solutions, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Nationstar Mortgage Holdings has a beta of 1.38, indicating that its share price is 38% more volatile than the S&P 500. Comparatively, Altisource Portfolio Solutions has a beta of 0.78, indicating that its share price is 22% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Nationstar Mortgage Holdings and Altisource Portfolio Solutions, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nationstar Mortgage Holdings 2 3 5 0 2.30
Altisource Portfolio Solutions 0 2 0 0 2.00

Nationstar Mortgage Holdings currently has a consensus price target of $18.33, suggesting a potential downside of 0.15%. Altisource Portfolio Solutions has a consensus price target of $19.00, suggesting a potential downside of 29.71%. Given Nationstar Mortgage Holdings’ stronger consensus rating and higher possible upside, research analysts plainly believe Nationstar Mortgage Holdings is more favorable than Altisource Portfolio Solutions.

Summary

Nationstar Mortgage Holdings beats Altisource Portfolio Solutions on 11 of the 14 factors compared between the two stocks.

About Nationstar Mortgage Holdings

Nationstar Mortgage Holdings Inc. provides servicing, origination and transaction based services principally to single-family residences throughout the United States. The Company operates through three segments: Servicing, Originations and Xome. The Company provides residential loan services in the United States. The Company also operates an integrated residential loan origination platform that is primarily focused on customer retention. Its Xome subsidiary offers an array of complementary services related to the purchase and disposition of residential real estate. It provides non-bank services and residential mortgage services in the United States conducting operations through its Nationstar Mortgage and Champion Mortgage brands. It originates and purchases conventional mortgage loans conforming to the underwriting standards of the government sponsored entities, which it collectively refers to as Agency loans. The Xome segment is a provider of technology and data-enhanced solutions.

About Altisource Portfolio Solutions

Altisource Portfolio Solutions S.A. is a marketplace and transaction solutions provider for the real estate, mortgage and consumer debt industries. The Company’s business processes, vendor and electronic payment management software and behavioral science-based analytics manage outcomes for marketplace participants. It operates through three segments: Mortgage Services, Financial Services and Technology Services. The Mortgage Services segment provides loan servicers, originators, rental property investors and real estate consumers with products, services and technologies. The Financial Services segment provides collection services to debt originators and servicers and customer relationship management services. The Technology Services segment provides software and data analytics solutions that support management of mortgage and real estate activities and marketplace transactions across mortgage and real estate lifecycles and information technology infrastructure management services.

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