Reviewing Finance of America Companies (NYSE:FOA) & StoneCo (NASDAQ:STNE)

StoneCo (NASDAQ:STNE) and Finance of America Companies (NYSE:FOA) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their valuation, earnings, analyst recommendations, institutional ownership, profitability, dividends and risk.

Profitability

This table compares StoneCo and Finance of America Companies’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
StoneCo	22.92%	22.19%	4.10%
Finance of America Companies	-0.10%	28.39%	0.35%

Valuation & Earnings

This table compares StoneCo and Finance of America Companies”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
StoneCo	$2.53 billion	1.10	$425.73 million	$2.48	4.50
Finance of America Companies	$497.43 million	0.40	$45.24 million	($3.01)	-3.83

StoneCo has higher revenue and earnings than Finance of America Companies. Finance of America Companies is trading at a lower price-to-earnings ratio than StoneCo, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

StoneCo has a beta of 1.68, indicating that its stock price is 68% more volatile than the S&P 500. Comparatively, Finance of America Companies has a beta of 1.68, indicating that its stock price is 68% more volatile than the S&P 500.

Institutional and Insider Ownership

73.2% of StoneCo shares are held by institutional investors. Comparatively, 97.2% of Finance of America Companies shares are held by institutional investors. 11.3% of StoneCo shares are held by insiders. Comparatively, 35.4% of Finance of America Companies shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent recommendations for StoneCo and Finance of America Companies, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
StoneCo	0	6	4	0	2.40
Finance of America Companies	2	1	2	0	2.00

StoneCo currently has a consensus price target of $14.30, suggesting a potential upside of 28.25%. Finance of America Companies has a consensus price target of $30.50, suggesting a potential upside of 164.41%. Given Finance of America Companies’ higher probable upside, analysts clearly believe Finance of America Companies is more favorable than StoneCo.

Summary

StoneCo beats Finance of America Companies on 9 of the 13 factors compared between the two stocks.

About StoneCo

StoneCo Ltd. provides financial technology and software solutions to merchants and integrated partners to conduct electronic commerce across in-store, online, and mobile channels in Brazil. It distributes its solutions, principally through proprietary Stone Hubs, which offer hyper-local sales and services; and sells solutions to brick-and-mortar and digital merchants through sales team. The company served small-and-medium-sized businesses; and marketplaces, e-commerce platforms, and integrated software vendors. StoneCo Ltd. was founded in 2000 and is headquartered in George Town, the Cayman Islands.

About Finance of America Companies

Finance of America Companies Inc. a financial service holding company, through its subsidiaries, engages in the operation of a retirement solutions platform in the United States. It operates through two segments: Retirement Solutions and Portfolio Management. The Retirement Solutions segment engages in the loan origination activities comprising home equity conversion, proprietary reverse, and hybrid mortgage loans for senior homeowners. The Portfolio Management segment provides product development, loan securitization, loan sales, risk management, servicing oversight, and asset management services for borrowers and investors. The company was founded in 2013 and is headquartered in Plano, Texas.