LendingTree (NASDAQ: TREE) and Ally Financial (NYSE:ALLY) are both mid-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their profitabiliy, dividends, analyst recommendations, risk, institutional ownership, earnings and valuation.

Risk and Volatility

LendingTree has a beta of 1.54, suggesting that its stock price is 54% more volatile than the S&P 500. Comparatively, Ally Financial has a beta of 1.39, suggesting that its stock price is 39% more volatile than the S&P 500.

Analyst Recommendations

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
LendingTree 0 0 11 0 3.00
Ally Financial 1 3 11 0 2.67

LendingTree presently has a consensus target price of $165.80, indicating a potential downside of 8.86%. Ally Financial has a consensus target price of $24.92, indicating a potential upside of 13.62%. Given Ally Financial’s higher probable upside, analysts plainly believe Ally Financial is more favorable than LendingTree.

Profitability

This table compares LendingTree and Ally Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
LendingTree 6.79% 18.12% 13.52%
Ally Financial 15.68% 7.63% 0.64%

Earnings & Valuation

This table compares LendingTree and Ally Financial’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
LendingTree $422.20 million 5.15 $63.04 million $2.22 81.95
Ally Financial $6.06 billion 1.74 $1.02 billion $2.12 10.34

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

Insider and Institutional Ownership

76.6% of LendingTree shares are held by institutional investors. Comparatively, 98.8% of Ally Financial shares are held by institutional investors. 21.9% of LendingTree shares are held by company insiders. Comparatively, 0.2% of Ally Financial shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Ally Financial pays an annual dividend of $0.32 per share and has a dividend yield of 1.5%. LendingTree does not pay a dividend. Ally Financial pays out 15.1% of its earnings in the form of a dividend.

Summary

LendingTree beats Ally Financial on 9 of the 15 factors compared between the two stocks.

About LendingTree

LendingTree, Inc. (LendingTree) is engaged in operating an online loan marketplace for consumers seeking loans and other credit-based offerings. The Company’s online marketplace provides consumers with access to product offerings from various lenders, which it refers to as Network Lenders, including mortgage loans, home equity loans and lines of credit, reverse mortgage loans, auto loans, credit cards, personal loans, student loans, small business loans and other related offerings. In addition, the Company offers tools and resources, including free credit scores that facilitate comparison shopping for these loans and other credit-based offerings. The Company offers its products in categories, including mortgage products and non-mortgage products. Its mortgage products category includes its purchase and refinance products. Its non-mortgage products include lending products and other products.

About Ally Financial

Ally Financial Inc. is a digital financial services company. The Company is a bank and financial holding company. Its segments include Automotive Finance operations, Insurance operations, Mortgage Finance operations, Corporate Finance operations, and Corporate and Other. The Automotive Finance operations segment provides the United States-based automotive financing services to consumers and automotive dealers, and automotive and equipment financing services to companies and municipalities. The Insurance operations segment offers both consumer finance protection and insurance products sold through the automotive dealer channel, and commercial insurance products sold directly to dealers. The Mortgage Finance operations segment consists of the management of a held-for-investment consumer mortgage finance loan portfolio. The Corporate Finance operations segment provides senior secured leveraged cash flow and asset-based loans to mostly the United States-based middle market companies.

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