LendingClub Corporation (NYSE: LC) and PHH Corp (NYSE:PHH) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, profitabiliy, valuation, analyst recommendations, institutional ownership, earnings and risk.

Institutional & Insider Ownership

90.9% of LendingClub Corporation shares are owned by institutional investors. Comparatively, 96.5% of PHH Corp shares are owned by institutional investors. 11.4% of LendingClub Corporation shares are owned by company insiders. Comparatively, 2.5% of PHH Corp shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares LendingClub Corporation and PHH Corp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
LendingClub Corporation -24.52% -11.97% -2.18%
PHH Corp -55.15% -19.92% -7.22%

Valuation and Earnings

This table compares LendingClub Corporation and PHH Corp’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
LendingClub Corporation $509.13 million 4.68 -$121.16 million ($0.30) -19.67
PHH Corp $733.00 million 1.02 -$273.43 million ($5.10) -2.74

LendingClub Corporation has higher revenue, but lower earnings than PHH Corp. LendingClub Corporation is trading at a lower price-to-earnings ratio than PHH Corp, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

LendingClub Corporation has a beta of 1.86, indicating that its share price is 86% more volatile than the S&P 500. Comparatively, PHH Corp has a beta of 1.94, indicating that its share price is 94% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations for LendingClub Corporation and PHH Corp, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
LendingClub Corporation 0 9 7 0 2.44
PHH Corp 0 2 1 0 2.33

LendingClub Corporation currently has a consensus price target of $6.75, suggesting a potential upside of 14.41%. PHH Corp has a consensus price target of $16.50, suggesting a potential upside of 18.28%. Given PHH Corp’s higher probable upside, analysts plainly believe PHH Corp is more favorable than LendingClub Corporation.

Summary

LendingClub Corporation beats PHH Corp on 9 of the 13 factors compared between the two stocks.

LendingClub Corporation Company Profile

LendingClub Corporation provides online marketplace to connect borrowers and investors. Consumers and small business owners borrow through Lending Club. Investors use Lending Club to earn risk-adjusted returns from an asset class that has been closed to many investors and only available on a limited basis to large institutional investors. Its technology automates aspects of operations, including the borrower application process, data gathering, credit decisioning and scoring, loan funding, investing and servicing, regulatory compliance and fraud detection. Its platform offers analytical tools and data to enable investors to make decisions and assess their portfolios. Its technology platform has allowed it to expand its offerings from personal loans to include small business loans, and to expand investor classes from individuals to institutions and create various investment vehicles.

PHH Corp Company Profile

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.

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