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

Institutional and Insider Ownership

56.5% of Walter Investment Management Corp. shares are owned by institutional investors. Comparatively, 17.9% of Porter Bancorp shares are owned by institutional investors. 46.6% of Walter Investment Management Corp. shares are owned by insiders. Comparatively, 28.7% of Porter Bancorp shares are owned by 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 Porter Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Walter Investment Management Corp. -18.10% -796.24% -0.52%
Porter Bancorp -4.59% -5.33% -0.20%

Earnings & Valuation

This table compares Walter Investment Management Corp. and Porter Bancorp’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 0.02 -$217.78 million ($5.96) -0.09
Porter Bancorp $35.80 million 2.13 -$2.01 million ($0.33) -37.88

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

Risk & Volatility

Walter Investment Management Corp. has a beta of 0.58, meaning that its stock price is 42% less volatile than the S&P 500. Comparatively, Porter Bancorp has a beta of 1.68, meaning that its stock price is 68% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Walter Investment Management Corp. and Porter Bancorp, 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
Porter Bancorp 0 0 0 0 N/A

Walter Investment Management Corp. presently has a consensus price target of $1.13, suggesting a potential upside of 121.94%. Given Walter Investment Management Corp.’s higher possible upside, equities analysts plainly believe Walter Investment Management Corp. is more favorable than Porter Bancorp.

Summary

Porter Bancorp beats Walter Investment Management Corp. on 7 of the 11 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 Porter Bancorp

Porter Bancorp, Inc. is a bank holding company. The Company operates through its subsidiary, PBI Bank (the Bank). The Bank is a community bank with a range of commercial and personal banking products. It offers retail and commercial deposit products. It offers drive-in banking facilities, automatic teller machines, night depository, personalized checks, credit cards, debit cards, Internet banking, mobile banking, treasury management services, remote deposit services, electronic funds transfers through automated clearing house services, domestic and foreign wire transfers, cash management, vault services, and loan and deposit sweep accounts. It operates banking offices in approximately 12 counties in Kentucky. Its markets include metropolitan Louisville in Jefferson County and the surrounding counties of Henry and Bullitt. It serves south central Kentucky and southern Kentucky from banking offices in Butler, Green, Hart, Edmonson, Barren, Warren, Ohio and Daviess Counties.

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