FirstCash (NYSE: FCFS) and Stonegate Mortgage (NYSE:SGM) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their risk, profitability, dividends, institutional ownership, valuation, analyst recommendations and earnings.

Dividends

FirstCash pays an annual dividend of $0.80 per share and has a dividend yield of 1.1%. Stonegate Mortgage does not pay a dividend. FirstCash pays out 34.2% of its earnings in the form of a dividend.

Profitability

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

Net Margins Return on Equity Return on Assets
FirstCash 6.41% 8.45% 5.91%
Stonegate Mortgage -13.22% -6.70% -1.57%

Institutional and Insider Ownership

95.6% of FirstCash shares are owned by institutional investors. Comparatively, 44.3% of Stonegate Mortgage shares are owned by institutional investors. 2.8% of FirstCash shares are owned by company insiders. Comparatively, 44.5% of Stonegate Mortgage shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Volatility and Risk

FirstCash has a beta of 0.79, meaning that its share price is 21% less volatile than the S&P 500. Comparatively, Stonegate Mortgage has a beta of 1.45, meaning that its share price is 45% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for FirstCash and Stonegate Mortgage, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
FirstCash 0 2 5 0 2.71
Stonegate Mortgage 0 0 0 0 N/A

FirstCash presently has a consensus target price of $65.50, suggesting a potential downside of 8.07%. Given FirstCash’s higher probable upside, equities research analysts clearly believe FirstCash is more favorable than Stonegate Mortgage.

Earnings & Valuation

This table compares FirstCash and Stonegate Mortgage’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
FirstCash $1.09 billion 3.09 $60.12 million $2.34 30.45
Stonegate Mortgage N/A N/A N/A $1.16 6.89

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

Summary

FirstCash beats Stonegate Mortgage on 10 of the 13 factors compared between the two stocks.

About FirstCash

FirstCash, Inc., formerly First Cash Financial Services, Inc., is an operator of retail-based pawn stores in the United States and Latin America. The Company’s primary business is the operation of full-service pawn stores, which make small pawn loans secured by personal property, such as consumer electronics, jewelry, power tools, household appliances, sporting goods and musical instruments. The Company’s operates through two segments: the U.S. operations segment and the Latin America operations segment. The U.S. operations segment consists of all pawn and consumer loan operations in the United States and the Latin America operations segment consists of all pawn and consumer loan operations in Latin America, which includes operations in Mexico, Guatemala and El Salvador. In addition, some of the Company’s pawn stores offer small unsecured consumer loans or credit services products. The Company also operates consumer finance stores in Texas and Mexico.

About Stonegate Mortgage

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.

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