HFF (NYSE: HF) and Nationstar Mortgage Holdings (NYSE:NSM) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their earnings, risk, analyst recommendations, profitability, institutional ownership, dividends and valuation.

Risk & Volatility

HFF has a beta of 1.16, meaning that its share price is 16% more volatile than the S&P 500. Comparatively, Nationstar Mortgage Holdings has a beta of 1.48, meaning that its share price is 48% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
HFF 15.20% 39.03% 8.30%
Nationstar Mortgage Holdings 9.34% 8.88% 0.80%

Earnings & Valuation

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

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
HFF $517.43 million 3.36 $77.19 million $2.23 20.21
Nationstar Mortgage Holdings $1.93 billion 0.83 $19.00 million $1.90 8.67

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

Analyst Ratings

This is a breakdown of recent ratings and price targets for HFF and Nationstar Mortgage Holdings, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
HFF 1 2 1 0 2.00
Nationstar Mortgage Holdings 2 3 5 0 2.30

HFF presently has a consensus target price of $28.00, indicating a potential downside of 37.86%. Nationstar Mortgage Holdings has a consensus target price of $18.33, indicating a potential upside of 11.25%. Given Nationstar Mortgage Holdings’ stronger consensus rating and higher probable upside, analysts plainly believe Nationstar Mortgage Holdings is more favorable than HFF.

Institutional and Insider Ownership

90.5% of HFF shares are held by institutional investors. Comparatively, 97.9% of Nationstar Mortgage Holdings shares are held by institutional investors. 5.7% of HFF shares are held by company insiders. Comparatively, 0.8% of Nationstar Mortgage Holdings shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

HFF beats Nationstar Mortgage Holdings on 8 of the 14 factors compared between the two stocks.

About HFF

HFF, Inc. is a holding company. The Company holds the partnership interests in Holliday Fenoglio Fowler, L.P. and HFF Securities L.P. (together, the Operating Partnerships), held through the subsidiary HFF Partnership Holdings, LLC, and all of the outstanding shares of Holliday GP Corp. (Holliday GP). The Company operates through the commercial real estate financial intermediary segment. It offers debt placement, investment sales, distressed debt and real estate owned advisory services, equity placement, investment banking and advisory services, loan sales and commercial loan servicing. Its fully-integrated national capital markets platform, coupled with its knowledge of the commercial real estate markets provides an range of capital markets services, including Debt placement; Investment sales; Distressed debt and real estate owned advisory services; Equity placement; Investment banking and advisory services; Loan sales; and Commercial loan servicing.

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.

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