PHH (NYSE: PHH) and Stonegate Mortgage (NYSE:SGM) are both small-cap financials companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, dividends, profitability, analyst recommendations, valuation, earnings and risk.
Risk and Volatility
PHH has a beta of 1.84, indicating that its stock price is 84% more volatile than the S&P 500. Comparatively, Stonegate Mortgage has a beta of 1.45, indicating that its stock price is 45% more volatile than the S&P 500.
This table compares PHH and Stonegate Mortgage’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a breakdown of current recommendations for PHH and Stonegate Mortgage, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
PHH presently has a consensus target price of $15.83, indicating a potential upside of 40.99%. Given PHH’s higher probable upside, research analysts plainly believe PHH is more favorable than Stonegate Mortgage.
Institutional and Insider Ownership
93.3% of PHH shares are owned by institutional investors. Comparatively, 44.3% of Stonegate Mortgage shares are owned by institutional investors. 2.5% of PHH shares are owned by company insiders. Comparatively, 44.5% of Stonegate Mortgage shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
Earnings & Valuation
This table compares PHH and Stonegate Mortgage’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|PHH||$622.00 million||0.59||-$202.00 million||($5.74)||-1.96|
Stonegate Mortgage has lower revenue, but higher earnings than PHH. PHH is trading at a lower price-to-earnings ratio than Stonegate Mortgage, indicating that it is currently the more affordable of the two stocks.
PHH Corporation is a standalone mortgage company. The Company provides outsourced mortgage banking services to a range of clients, including financial institutions and real estate brokers throughout the United States, and is focused on originating, selling, servicing and subservicing residential mortgage loans through its subsidiary, PHH Mortgage Corporation and its subsidiaries. It operates through two segments: Mortgage Production and Mortgage Servicing. The Mortgage Production segment provides mortgage loan origination services and sells mortgage loans. The Mortgage Servicing segment performs servicing activities for loans originated by the Company and mortgage servicing rights purchased from others, and acts as a subservicer for certain clients that own the underlying mortgage servicing rights. The Mortgage Production segment provides private label mortgage services to financial institutions and real estate brokers, and sources mortgage loans through its retail platform.
About Stonegate Mortgage
Stonegate Mortgage Corporation is a non-bank mortgage company. The Company is focused on originating, financing and servicing the United States residential mortgage loans. The Company’s segments include Originations, Servicing, Financing and Other. The Originations segment primarily originates and sells residential mortgage loans, which conform to the underwriting guidelines of the government sponsored enterprises and government agencies, and non-agency whole loan investors. The Servicing segment includes loan administration, collection and default activities, including the collection and remittance of loan payments, responding to customer inquiries, collection of principal and interest payments, holding custodial funds for the payment of property taxes and insurance premiums, counseling delinquent mortgagors and modifying loans. The Financing segment includes warehouse-lending activities to correspondent customers by the Company’s subsidiary, NattyMac, LLC.
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