Critical Analysis: Upstart (NASDAQ:UPST) vs. Oportun Financial (NASDAQ:OPRT)

Oportun Financial (NASDAQ:OPRT) and Upstart (NASDAQ:UPST) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, dividends, earnings, risk, analyst recommendations, valuation and profitability.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Oportun Financial and Upstart, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Oportun Financial	0	3	2	1	2.67
Upstart	1	9	7	0	2.35

Oportun Financial currently has a consensus target price of $9.25, suggesting a potential downside of 21.61%. Upstart has a consensus target price of $32.40, suggesting a potential upside of 57.59%. Given Upstart’s higher probable upside, analysts clearly believe Upstart is more favorable than Oportun Financial.

Institutional and Insider Ownership

82.7% of Oportun Financial shares are owned by institutional investors. Comparatively, 63.0% of Upstart shares are owned by institutional investors. 1.6% of Oportun Financial shares are owned by insiders. Comparatively, 17.3% of Upstart shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Volatility & Risk

Oportun Financial has a beta of 1.29, meaning that its stock price is 29% more volatile than the S&P 500. Comparatively, Upstart has a beta of 2.48, meaning that its stock price is 148% more volatile than the S&P 500.

Profitability

This table compares Oportun Financial and Upstart’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Oportun Financial	3.88%	14.67%	1.87%
Upstart	4.86%	9.67%	2.50%

Valuation & Earnings

This table compares Oportun Financial and Upstart”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Oportun Financial	$417.50 million	1.30	$25.25 million	$0.74	15.95
Upstart	$1.32 billion	1.54	$53.60 million	$0.59	34.85

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

Summary

Upstart beats Oportun Financial on 10 of the 15 factors compared between the two stocks.

About Oportun Financial

Oportun Financial provides consumer financial products designed primarily for people with limited or no credit history. Its offerings include personal loans and credit cards, supported by technology intended to help customers access credit and build their financial histories. Founded in 2005 as Progreso Financiero, the company later adopted the Oportun name. It serves customers in the United States through digital channels and a network of retail locations. Oportun has also offered savings-related services, including automated savings tools.

About Upstart

Upstart Holdings, Inc. operates an artificial intelligence–based lending marketplace that connects consumers seeking loans with banks and credit unions. Its platform uses machine-learning models and borrower data to help lending partners assess credit risk and make lending decisions. The company’s offerings include personal loans and technology for auto lending, including auto retail and refinancing. Upstart was founded in 2012 by Dave Girouard, Paul Gu and Anna Counselman. Girouard serves as the company’s chief executive officer.