World Acceptance Corporation (NASDAQ: WRLD) and LendingTree (NASDAQ:TREE) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, dividends, institutional ownership, earnings, valuation, profitability and analyst recommendations.

Volatility and Risk

World Acceptance Corporation has a beta of 2.34, suggesting that its stock price is 134% more volatile than the S&P 500. Comparatively, LendingTree has a beta of 1.55, suggesting that its stock price is 55% more volatile than the S&P 500.

Insider & Institutional Ownership

91.9% of World Acceptance Corporation shares are owned by institutional investors. Comparatively, 71.7% of LendingTree shares are owned by institutional investors. 27.3% of World Acceptance Corporation shares are owned by company insiders. Comparatively, 21.9% of LendingTree shares are owned 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.

Profitability

This table compares World Acceptance Corporation and LendingTree’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
World Acceptance Corporation 13.13% 15.75% 8.48%
LendingTree 5.85% 17.01% 10.47%

Earnings and Valuation

This table compares World Acceptance Corporation and LendingTree’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
World Acceptance Corporation $533.56 million 1.30 $136.07 million $7.98 9.98
LendingTree $480.69 million 6.16 $73.26 million $2.14 115.30

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

Analyst Recommendations

This is a summary of recent recommendations and price targets for World Acceptance Corporation and LendingTree, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
World Acceptance Corporation 3 0 0 0 1.00
LendingTree 0 0 12 0 3.00

World Acceptance Corporation currently has a consensus target price of $52.33, indicating a potential downside of 34.32%. LendingTree has a consensus target price of $188.91, indicating a potential downside of 23.44%. Given LendingTree’s stronger consensus rating and higher probable upside, analysts clearly believe LendingTree is more favorable than World Acceptance Corporation.

About World Acceptance Corporation

World Acceptance Corporation operates a small-loan consumer finance business in 15 states and Mexico as of March 31, 2016. The Company offers short-term small installment loans, medium-term larger installment loans, related credit insurance and ancillary products and services to individuals. The Company offers standardized installment loans generally between $300 and $4,000 through 1,339 branches in Alabama, Georgia, Idaho, Illinois, Indiana, Kentucky, Louisiana, Mississippi, Missouri, New Mexico, Oklahoma, South Carolina, Texas, Tennessee, Wisconsin and Mexico as of March 31, 2016. The Company generally serves individuals with limited access to other sources of consumer credit, such as banks, credit unions, other consumer finance businesses and credit card lenders. In the United States branches, the Company also offers income tax return preparation services to its loan customers and other individuals.

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.

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