Blackhawk Network (NASDAQ: HAWK) and NetSpend (NASDAQ:NTSP) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, institutional ownership, dividends, profitability, earnings and risk.

Profitability

This table compares Blackhawk Network and NetSpend’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Blackhawk Network -0.14% 4.12% 1.12%
NetSpend N/A N/A N/A

Valuation and Earnings

This table compares Blackhawk Network and NetSpend’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Blackhawk Network $1.90 billion 1.05 $4.65 million ($0.06) -583.24
NetSpend N/A N/A N/A $0.44 N/A

Blackhawk Network has higher revenue and earnings than NetSpend. Blackhawk Network is trading at a lower price-to-earnings ratio than NetSpend, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Blackhawk Network and NetSpend, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Blackhawk Network 0 5 8 0 2.62
NetSpend 0 0 0 0 N/A

Blackhawk Network currently has a consensus target price of $47.33, indicating a potential upside of 35.24%.

Insider & Institutional Ownership

96.7% of Blackhawk Network shares are owned by institutional investors. 3.8% of Blackhawk Network shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Blackhawk Network beats NetSpend on 6 of the 8 factors compared between the two stocks.

Blackhawk Network Company Profile

Blackhawk Network Holdings, Inc. is a prepaid payment network. The Company operates through three segments: U.S. Retail, International, and Incentives & Rewards. The U.S. Retail segment is engaged in the sale of prepaid products to consumers at its retail distribution partners and online and the sale of telecom handsets to retail distribution partners for resale to consumers. Its Incentives & Rewards segment is engaged in the sale of prepaid products, software and services to its business clients. It distributes closed loop gift cards in categories, including digital media and e-commerce, dining, electronics, entertainment, fashion and travel. It distributes a range of prepaid wireless or cellular cards. It also provides reloads for reloadable prepaid products, including prepaid telecom accounts and general-purpose reloadable cards. Its incentives businesses provide software, consulting services, program management, reward processing and reward fulfillment to its business clients.

NetSpend Company Profile

NetSpend Holdings, Inc. (NetSpend) is a provider of general-purpose reloadable prepaid debit cards (GPR) cards, and related alternative financial services to underbanked consumers in the United States. NetSpend’s GPR cards are tied to the Federal Deposit Insurance Corporation (FDIC)-insured depository accounts and can be used to make purchase transactions at any merchant that participates in the MasterCard, Visa or PULSE networks and to withdraw funds at participating automated teller machines (ATMs). The Company also offers to its cardholders direct deposit, interest-bearing savings accounts, bill pay and card-to-card transfer functionality, personal financial management tools and online and mobile phone card account access. As of December 31, 2010, the Company marketed its GPR cards through approximately 750 retail distributors at approximately 39,000 locations. As of August 21, 2010, the Company ceased marketing gift cards.

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