Orix Corp Ads (NYSE: IX) and Encore Capital Group (NASDAQ:ECPG) are both finance companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, risk, dividends, earnings, analyst recommendations, institutional ownership and profitability.

Profitability

This table compares Orix Corp Ads and Encore Capital Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Orix Corp Ads 9.95% 10.88% 2.55%
Encore Capital Group 6.28% 12.38% 1.86%

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Orix Corp Ads and Encore Capital Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Orix Corp Ads 0 0 0 1 4.00
Encore Capital Group 0 4 1 0 2.20

Encore Capital Group has a consensus price target of $35.90, suggesting a potential downside of 10.14%. Given Encore Capital Group’s higher probable upside, analysts clearly believe Encore Capital Group is more favorable than Orix Corp Ads.

Valuation & Earnings

This table compares Orix Corp Ads and Encore Capital Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Orix Corp Ads $26.10 billion 0.83 $6.19 billion $0.96 84.76
Encore Capital Group $1.01 billion 1.02 $257.54 million $2.44 16.37

Orix Corp Ads has higher revenue and earnings than Encore Capital Group. Encore Capital Group is trading at a lower price-to-earnings ratio than Orix Corp Ads, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Orix Corp Ads has a beta of 1.43, meaning that its stock price is 43% more volatile than the S&P 500. Comparatively, Encore Capital Group has a beta of 1.76, meaning that its stock price is 76% more volatile than the S&P 500.

Dividends

Orix Corp Ads pays an annual dividend of $2.10 per share and has a dividend yield of 2.6%. Encore Capital Group does not pay a dividend. Orix Corp Ads pays out 218.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Insider and Institutional Ownership

1.9% of Orix Corp Ads shares are owned by institutional investors. 0.1% of Orix Corp Ads shares are owned by insiders. Comparatively, 8.8% of Encore Capital Group shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

Encore Capital Group beats Orix Corp Ads on 9 of the 17 factors compared between the two stocks.

Orix Corp Ads Company Profile

ORIX Corporation (ORIX) is a financial services company. The Company operates through six segments: Corporate Financial Services, which consists of lending, leasing and fee business; Maintenance Leasing, which consists of automobile leasing and rentals, car sharing, and test and measurement instruments and information technology-related equipment rentals and leasing; Real Estate, which consists of real estate development and rental, facility operation, real estate investment trust (REIT) asset management, and real estate investment advisory services; Investment and Operation, which consists of environment and energy-related business, principal investment and loan servicing (asset recovery); Retail Segment, which consists of life insurance, banking and card loan business, and Overseas Business, which consists of leasing, lending, investment in bonds, investment banking, asset management and ship- and aircraft-related operations.

Encore Capital Group Company Profile

Encore Capital Group, Inc., through its subsidiaries, is a specialty finance company providing debt recovery solutions for consumers and property owners across a range of financial assets. The Company operates through Portfolio Purchasing and Recovery segment. The Company’s geographical segments include the United States, Europe and other. The Company’s portfolios of defaulted consumer receivables at discounts and manages them by partnering with individuals as they repay their obligations and work toward financial recovery. Defaulted receivables are consumers’ unpaid financial commitments to credit originators, including banks, credit unions, consumer finance companies, commercial retailers, and telecommunication companies. Defaulted receivables also include receivables subject to bankruptcy proceedings. The Company through certain subsidiaries, is engaged in portfolio purchasing and recovery in the United States, including Puerto Rico.

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