Critical Analysis: LendingClub (NYSE:LC) vs. Capital One Financial (NYSE:COF)

LendingClub (NYSE:LC) and Capital One Financial (NYSE:COF) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, earnings, valuation, profitability, dividends, institutional ownership and analyst recommendations.

Profitability

This table compares LendingClub and Capital One Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
LendingClub	16.99%	11.92%	1.55%
Capital One Financial	13.37%	11.28%	1.90%

Analyst Recommendations

This is a summary of recent ratings and price targets for LendingClub and Capital One Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
LendingClub	0	2	6	1	2.89
Capital One Financial	0	3	21	0	2.88

LendingClub currently has a consensus target price of $23.07, suggesting a potential upside of 20.10%. Capital One Financial has a consensus target price of $258.91, suggesting a potential upside of 25.33%. Given Capital One Financial’s higher probable upside, analysts plainly believe Capital One Financial is more favorable than LendingClub.

Valuation and Earnings

This table compares LendingClub and Capital One Financial”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
LendingClub	$1.03 billion	2.14	$135.68 million	$1.49	12.89
Capital One Financial	$69.25 billion	1.83	$2.45 billion	$16.16	12.78

Capital One Financial has higher revenue and earnings than LendingClub. Capital One Financial is trading at a lower price-to-earnings ratio than LendingClub, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

LendingClub has a beta of 1.98, suggesting that its share price is 98% more volatile than the S&P 500. Comparatively, Capital One Financial has a beta of 1.02, suggesting that its share price is 2% more volatile than the S&P 500.

Institutional and Insider Ownership

74.1% of LendingClub shares are owned by institutional investors. Comparatively, 89.8% of Capital One Financial shares are owned by institutional investors. 3.2% of LendingClub shares are owned by company insiders. Comparatively, 0.8% of Capital One Financial shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Summary

LendingClub beats Capital One Financial on 8 of the 15 factors compared between the two stocks.

About LendingClub

LendingClub Corporation, operates as a bank holding company, that provides range of financial products and services in the United States. It offers deposit products, including savings accounts, checking accounts, and certificates of deposit. The company also provides loan products, such as consumer loans comprising unsecured personal loans, secured auto refinance loans, and patient and education finance loans; and commercial loans, including small business loans. In addition, it operates an online lending marketplace platform. The company was incorporated in 2006 and is headquartered in San Francisco, California.

About Capital One Financial

Capital One Financial Corporation operates as the financial services holding company for the Capital One, National Association, which engages in the provision of various financial products and services in the United States, Canada, and the United Kingdom. It operates through three segments: Credit Card, Consumer Banking, and Commercial Banking. The company accepts checking accounts, money market deposits, negotiable order of withdrawals, savings deposits, and time deposits. Its loan products include credit card loans; auto and retail banking loans; and commercial and multifamily real estate, and commercial and industrial loans. The company also offers credit and debit card products; online direct banking services; and provides advisory, capital markets, treasury management, and depository services. It serves consumers, small businesses, and commercial clients through digital channels, branches, cafés, and other distribution channels located in New York, Louisiana, Texas, Maryland, Virginia, New Jersey, and California. The company was founded in 1988 and is headquartered in McLean, Virginia.