Head-To-Head Survey: Marcus & Millichap (MMI) versus Nationstar Mortgage Holdings (NYSE:NSM)

Nationstar Mortgage Holdings (NYSE: NSM) and Marcus & Millichap (NYSE:MMI) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, earnings, valuation, institutional ownership, risk, profitability and analyst recommendations.

Volatility & Risk

Nationstar Mortgage Holdings has a beta of 1.38, meaning that its stock price is 38% more volatile than the S&P 500. Comparatively, Marcus & Millichap has a beta of 1.55, meaning that its stock price is 55% more volatile than the S&P 500.

Profitability

This table compares Nationstar Mortgage Holdings and Marcus & Millichap’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Nationstar Mortgage Holdings 10.52% 9.64% 0.87%
Marcus & Millichap 8.51% 22.56% 15.79%

Institutional & Insider Ownership

99.0% of Nationstar Mortgage Holdings shares are held by institutional investors. Comparatively, 42.0% of Marcus & Millichap shares are held by institutional investors. 0.8% of Nationstar Mortgage Holdings shares are held by company insiders. Comparatively, 58.3% of Marcus & Millichap shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Nationstar Mortgage Holdings and Marcus & Millichap’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Nationstar Mortgage Holdings $1.42 billion 1.39 $223.85 million $2.29 8.81
Marcus & Millichap $703.37 million 1.51 $101.83 million $1.54 18.06

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

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Nationstar Mortgage Holdings and Marcus & Millichap, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nationstar Mortgage Holdings 2 3 5 0 2.30
Marcus & Millichap 0 3 0 0 2.00

Nationstar Mortgage Holdings presently has a consensus price target of $18.33, suggesting a potential downside of 9.11%. Marcus & Millichap has a consensus price target of $27.00, suggesting a potential downside of 2.91%. Given Marcus & Millichap’s higher possible upside, analysts clearly believe Marcus & Millichap is more favorable than Nationstar Mortgage Holdings.

Nationstar Mortgage Holdings Company Profile

Nationstar Mortgage Holdings Inc. provides servicing, origination and transaction based services principally to single-family residences throughout the United States. The Company operates through three segments: Servicing, Originations and Xome. The Company provides residential loan services in the United States. The Company also operates an integrated residential loan origination platform that is primarily focused on customer retention. Its Xome subsidiary offers an array of complementary services related to the purchase and disposition of residential real estate. It provides non-bank services and residential mortgage services in the United States conducting operations through its Nationstar Mortgage and Champion Mortgage brands. It originates and purchases conventional mortgage loans conforming to the underwriting standards of the government sponsored entities, which it collectively refers to as Agency loans. The Xome segment is a provider of technology and data-enhanced solutions.

Marcus & Millichap Company Profile

Marcus & Millichap, Inc. is a brokerage company specializing in commercial real estate investment sales, financing, research and advisory services. The Company offers three primary services to its clients: commercial real estate investment brokerage, financing, and ancillary services, including other research, advisory and consulting services. It provides its financing services through Marcus & Millichap Capital Corporation, which is a broker of debt financing for commercial properties. Its research, advisory and consulting services are designed to assist clients in forming their investment strategy and making transaction decisions. Its advisory services include opinions of value, operating and financial performance benchmarking analysis, and specific asset buy-sell strategies. As of December 31, 2016, the Company had over 1,700 investment sales and financing professionals in 82 offices in the United States and Canada that provide investment brokerage and financing services.

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