Stonegate Mortgage (NYSE: SGM) and Regional Management (NYSE:RM) are both small-cap financials companies, but which is the superior business? We will contrast the two businesses based on the strength of their dividends, earnings, analyst recommendations, institutional ownership, risk, profitability and valuation.

Volatility & Risk

Stonegate Mortgage has a beta of 1.45, meaning that its share price is 45% more volatile than the S&P 500. Comparatively, Regional Management has a beta of 1.38, meaning that its share price is 38% more volatile than the S&P 500.

Profitability

This table compares Stonegate Mortgage and Regional Management’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Stonegate Mortgage -13.22% -6.70% -1.57%
Regional Management 9.66% 12.62% 3.78%

Institutional & Insider Ownership

44.3% of Stonegate Mortgage shares are owned by institutional investors. Comparatively, 86.4% of Regional Management shares are owned by institutional investors. 44.5% of Stonegate Mortgage shares are owned by insiders. Comparatively, 9.5% of Regional Management shares are owned by 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.

Valuation & Earnings

This table compares Stonegate Mortgage and Regional Management’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Stonegate Mortgage N/A N/A N/A $1.16 6.89
Regional Management $240.52 million 1.21 $24.03 million $2.17 11.50

Regional Management has higher revenue and earnings than Stonegate Mortgage. Stonegate Mortgage is trading at a lower price-to-earnings ratio than Regional Management, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent ratings and price targets for Stonegate Mortgage and Regional Management, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Stonegate Mortgage 0 0 0 0 N/A
Regional Management 0 4 1 0 2.20

Regional Management has a consensus price target of $26.00, indicating a potential upside of 4.17%. Given Regional Management’s higher possible upside, analysts plainly believe Regional Management is more favorable than Stonegate Mortgage.

Summary

Regional Management beats Stonegate Mortgage on 8 of the 10 factors compared between the two stocks.

Stonegate Mortgage Company Profile

Stonegate Mortgage Corporation is a non-bank mortgage company. The Company is focused on originating, financing and servicing the United States residential mortgage loans. The Company’s segments include Originations, Servicing, Financing and Other. The Originations segment primarily originates and sells residential mortgage loans, which conform to the underwriting guidelines of the government sponsored enterprises and government agencies, and non-agency whole loan investors. The Servicing segment includes loan administration, collection and default activities, including the collection and remittance of loan payments, responding to customer inquiries, collection of principal and interest payments, holding custodial funds for the payment of property taxes and insurance premiums, counseling delinquent mortgagors and modifying loans. The Financing segment includes warehouse-lending activities to correspondent customers by the Company’s subsidiary, NattyMac, LLC.

Regional Management Company Profile

Regional Management Corp. is a diversified consumer finance company. The Company provides an array of loan products primarily to customers with limited access to consumer credit from banks, thrifts, credit card companies and other traditional lenders. Its products include small loans, large loans, automobile loans, retail loans, and optional payment and collateral protection insurance products. It offers small loans ranging from $500 to $2,500, through its branches. It offers large installment loans with cash proceeds to the customer ranging from $2,501 to $20,000. As of December 31, 2016, automobile loans were offered in amounts up to $27,500. As of December 31, 2016, retail loans were indirect installment loans structured as retail installment sales contracts that were offered in amounts of up to $7,500. Optional Payment and Collateral Protection Insurance Products offer customers a number of optional payment and collateral protection insurance products.

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