Head to Head Contrast: NEWTEK Business Services (NEWT) & Etsy (ETSY)

NEWTEK Business Services (NASDAQ:NEWT) and Etsy (NASDAQ:ETSY) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, analyst recommendations, risk, valuation, institutional ownership, profitability and dividends.

Risk & Volatility

NEWTEK Business Services has a beta of 1.34, indicating that its share price is 34% more volatile than the S&P 500. Comparatively, Etsy has a beta of 0.61, indicating that its share price is 39% less volatile than the S&P 500.

Earnings & Valuation

This table compares NEWTEK Business Services and Etsy’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
NEWTEK Business Services $38.91 million 9.94 $38.97 million $1.77 11.63
Etsy $441.23 million 14.12 $81.80 million $0.38 136.87

Etsy has higher revenue and earnings than NEWTEK Business Services. NEWTEK Business Services is trading at a lower price-to-earnings ratio than Etsy, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent ratings for NEWTEK Business Services and Etsy, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NEWTEK Business Services 0 3 0 0 2.00
Etsy 0 5 6 0 2.55

NEWTEK Business Services presently has a consensus price target of $19.00, indicating a potential downside of 7.68%. Etsy has a consensus price target of $45.68, indicating a potential downside of 12.17%. Given NEWTEK Business Services’ higher probable upside, research analysts clearly believe NEWTEK Business Services is more favorable than Etsy.

Dividends

NEWTEK Business Services pays an annual dividend of $1.92 per share and has a dividend yield of 9.3%. Etsy does not pay a dividend. NEWTEK Business Services pays out 108.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. NEWTEK Business Services has raised its dividend for 2 consecutive years.

Institutional and Insider Ownership

21.1% of NEWTEK Business Services shares are owned by institutional investors. Comparatively, 88.3% of Etsy shares are owned by institutional investors. 6.3% of NEWTEK Business Services shares are owned by insiders. Comparatively, 2.8% of Etsy shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares NEWTEK Business Services and Etsy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NEWTEK Business Services 105.34% 8.86% 4.52%
Etsy 15.00% 14.20% 6.98%

Summary

Etsy beats NEWTEK Business Services on 10 of the 17 factors compared between the two stocks.

About NEWTEK Business Services

Newtek Business Services Corp. is a business development company specializing in providing financial and business services to the small-and medium-sized business market in the United States. The firm also seeks to invest in early stage businesses. The firm seeks to makes both debt and equity investments. Under debt investments, it focuses on first lien loans, which have terms of 1 to 25 years; second lien loans, which have terms of 5 to 25 years, and unsecured loans, which are provided to meet short-term funding needs and are repaid within 6 to 12 months. It operates through Electronic Payment Processing, Managed Technology Solutions, Small Business Finance, and Capcos segments. The company originates small business administration loans for the purpose of acquiring commercial real estate, machinery, equipment, and inventory, as well as to refinance debt and fund franchises, working capital, and business acquisitions; and offers small business loan servicing and consulting services to the Federal Deposit Insurance Corporation and various other financial institutions, as well as provides management services. Its electronic payment processing services include credit and debit card processing, check approval, ancillary processing equipment and software to merchants, eCommerce, electronic solutions to accept non-cash payments, check conversion, remote deposit capture, ACH processing, and electronic gift and loyalty card programs. The company also provides Website hosting, dedicated server, and cloud hosting services; Web design and development; Internet marketing; data storage and backup and other related services; and ecommerce services, such as payment processing, online shopping cart tools, Website design and Web related services; Accounts Receivable Financing, and The Secure Gateway. In addition, it offers Newtek Advantage, a mobile, real-time operating platform enabling a business to access data on a smartphone, tablet, laptop, or PC for eCommerce, credit/debit transactions, Website statistics, payroll, insurance, and business loans. Further, the company sells personal, commercial, and health/benefits lines of insurance products; and payroll management processing and employee tax filing services. It has strategic alliances with American International Group, CTAA, Navy Federal Credit Union, Credit Union National Association, Pershing, and others to provide agent services to small business clients. The firm seeks to invest in New York and Louisiana area. The firm seeks to invest $0.3 million to $3 million in businesses. It provides small business terms loans ranging from $0.05 million to $10 million. The firm also provides account receivable financing ranging from $0.05 million to $1.5 million. It also provides $0.05 million to $10 million financing to owner occupied real estate businesses whose average net income over the last 2 years must not exceed $2.5 million. Newtek Business Services Corp., formerly known as Newtek Business Services Inc., was incorporated on August 26, 2013 and is headquartered in Lake Success, New York with additional offices in Garden City, New York; Miami, Florida; Milwaukee, Wisconsin; New Orleans, Louisiana; and New York, New York.

About Etsy

Etsy, Inc. operates Etsy.com, a commerce platform to make, sell, and buy goods online and offline primarily in the United States, United Kingdom, Canada, Australia, France, and Germany. It provides various seller services and tools that are designed to help entrepreneurs for starting, managing, and scaling their businesses. The company offers approximately 50 million items across approximately 50 retail categories to buyers. It also provides various seller services, including Etsy payments, a payment processing service; promoted listings, an on-site advertising service that allows sellers to pay for prominent placement of their listings in search results; shipping labels, which allows sellers in the United States and Canada to purchase discounted shipping labels; and pattern, a service that allows sellers to build custom Websites, as well as offers seller tools and education resources to manage the administrative side of their businesses. Etsy, Inc. was founded in 2005 and is headquartered in Brooklyn, New York.

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