Newtek Business Services Corp. (NASDAQ: NEWT) and Fiserv (NASDAQ:FISV) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their analyst recommendations, risk, profitability, valuation, dividends, institutional ownership and earnings.

Volatility & Risk

Newtek Business Services Corp. has a beta of 1.44, meaning that its share price is 44% more volatile than the S&P 500. Comparatively, Fiserv has a beta of 0.82, meaning that its share price is 18% less volatile than the S&P 500.

Insider and Institutional Ownership

21.2% of Newtek Business Services Corp. shares are held by institutional investors. Comparatively, 88.9% of Fiserv shares are held by institutional investors. 6.7% of Newtek Business Services Corp. shares are held by company insiders. Comparatively, 1.8% of Fiserv shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Dividends

Newtek Business Services Corp. pays an annual dividend of $1.76 per share and has a dividend yield of 10.1%. Fiserv does not pay a dividend. Newtek Business Services Corp. pays out 106.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Newtek Business Services Corp. and Fiserv’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Newtek Business Services Corp. 78.03% 7.97% 4.20%
Fiserv 16.31% 43.56% 10.75%

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Newtek Business Services Corp. and Fiserv, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Newtek Business Services Corp. 0 2 0 0 2.00
Fiserv 0 8 5 0 2.38

Newtek Business Services Corp. currently has a consensus target price of $18.00, indicating a potential upside of 3.03%. Fiserv has a consensus target price of $130.35, indicating a potential upside of 2.07%. Given Newtek Business Services Corp.’s higher possible upside, equities research analysts clearly believe Newtek Business Services Corp. is more favorable than Fiserv.

Earnings and Valuation

This table compares Newtek Business Services Corp. and Fiserv’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Newtek Business Services Corp. $30.97 million 10.15 $27.30 million $1.65 10.59
Fiserv $5.51 billion 4.83 $930.00 million $4.21 30.33

Fiserv has higher revenue and earnings than Newtek Business Services Corp.. Newtek Business Services Corp. is trading at a lower price-to-earnings ratio than Fiserv, indicating that it is currently the more affordable of the two stocks.

Summary

Fiserv beats Newtek Business Services Corp. on 10 of the 16 factors compared between the two stocks.

About Newtek Business Services Corp.

Newtek Business Services Corp. is an internally managed non-diversified closed-end management investment company. The Company’s investment objective is to generate both current income and capital appreciation primarily through loans originated by its small business finance platform and its equity investments in certain portfolio companies that it controls. The Company is a national non-bank lender that provides, together with its controlled portfolio companies, a range of business services and financial products under the Newtek brand to the small and medium-sized business (SMB) market. The Company issues debt and makes equity investments in portfolio companies in various industries. Its products and services include Business Lending including the United States Small Business Administration (SBA) 7(a) and 504 lending, Electronic Payment Processing, Managed Technology Solutions (Cloud Computing), Data Backup, and Payroll and Benefits Solutions to SMB accounts across all industries.

About Fiserv

Fiserv, Inc. is a provider of financial services technology. The Company provides account processing systems; electronic payments processing products and services, such as electronic bill payments, transaction processing, account-to-account transfers, and person-to-person payments; Internet and mobile banking systems, and related services, including document and payment card production and distribution, and lending and risk management products and services. The Company operates through two segments: Payments and Industry Products and the Financial Institution Services. The Payments segment services include electronic bill payment and presentment services, Internet and mobile banking software and services, and other electronic payments software and services. The Financial segment provides account processing services, item processing and source capture services, loan origination and servicing products, cash management and consulting services, and other products and services.

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