PennyMac Financial Services (NYSE:PFSI – Get Free Report) and Zillow Group (NASDAQ:ZG – Get Free Report) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, earnings, risk, profitability, valuation, analyst recommendations and dividends.
Valuation and Earnings
This table compares PennyMac Financial Services and Zillow Group”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| PennyMac Financial Services | $1.59 billion | 3.23 | $311.42 million | $6.52 | 15.27 |
| Zillow Group | $2.24 billion | 7.36 | -$112.00 million | ($0.34) | -200.59 |
Insider and Institutional Ownership
57.9% of PennyMac Financial Services shares are held by institutional investors. Comparatively, 20.3% of Zillow Group shares are held by institutional investors. 15.8% of PennyMac Financial Services shares are held by insiders. Comparatively, 17.1% of Zillow Group shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Profitability
This table compares PennyMac Financial Services and Zillow Group’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| PennyMac Financial Services | 20.27% | 14.78% | 2.37% |
| Zillow Group | -3.51% | -1.62% | -1.25% |
Risk and Volatility
PennyMac Financial Services has a beta of 1.55, meaning that its stock price is 55% more volatile than the S&P 500. Comparatively, Zillow Group has a beta of 2.11, meaning that its stock price is 111% more volatile than the S&P 500.
Analyst Recommendations
This is a breakdown of recent ratings for PennyMac Financial Services and Zillow Group, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| PennyMac Financial Services | 0 | 1 | 5 | 0 | 2.83 |
| Zillow Group | 1 | 9 | 12 | 0 | 2.50 |
PennyMac Financial Services currently has a consensus price target of $121.17, indicating a potential upside of 21.67%. Zillow Group has a consensus price target of $81.80, indicating a potential upside of 19.94%. Given PennyMac Financial Services’ stronger consensus rating and higher possible upside, analysts plainly believe PennyMac Financial Services is more favorable than Zillow Group.
Summary
PennyMac Financial Services beats Zillow Group on 9 of the 14 factors compared between the two stocks.
About PennyMac Financial Services
PennyMac Financial Services, Inc., through its subsidiaries, engages in the mortgage banking and investment management activities in the United States. The company operates through three segments: Production, Servicing, and Investment Management. The Production segment is involved in the origination, acquisition, and sale of loans. This segment sources residential conventional and government-insured or guaranteed mortgage loans through correspondent production, consumer direct lending, and broker direct lending. The Servicing segment performs loan servicing for both newly originated loans that are under holding for sale and loans services for others. The segment performs loan administration, collection, and default management activities, including the collection and remittance of loan payments; responds to customer inquiries; provides accounting for principal and interest; holds custodial funds for the payment of property taxes and insurance premiums; counsels delinquent borrowers; and supervising foreclosures and property dispositions, as well as administers loss mitigation activities, such as modification and forbearance programs. The Investment Management segment is involved in sourcing, performing diligence, bidding, and closing investment asset acquisitions; managing correspondent production activities for PennyMac Mortgage Investment Trust; and managing acquired assets. The company was founded in 2008 and is headquartered in Westlake Village, California.
About Zillow Group
Zillow Group, Inc. operates real estate brands in mobile applications and Websites in the United States. The company offers premier agent and rentals marketplaces, new construction marketplaces, advertising, display advertising, and business technology solutions, as well as dotloop and floor plans. It also provides mortgage originations and the sale of mortgages, and advertising to mortgage lenders and other mortgage professionals; and title and escrow services. In addition, the company's brand portfolio includes Zillow Premier Agent, Zillow Home Loans, Zillow Rentals, Trulia, StreetEasy, HotPads, and Out East; and a suite of marketing software and technology solutions for the real estate industry, including ShowingTime+, Spruce, and Follow Up Boss. Zillow Group, Inc. was incorporated in 2004 and is headquartered in Seattle, Washington.
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