Synchrony Financial (NYSE: SYF) and Stonegate Mortgage Corp (NYSE:SGM) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, profitability, risk, institutional ownership, earnings, dividends and analyst recommendations.
Volatility and Risk
Synchrony Financial has a beta of 1.02, suggesting that its share price is 2% more volatile than the S&P 500. Comparatively, Stonegate Mortgage Corp has a beta of 1.45, suggesting that its share price is 45% more volatile than the S&P 500.
Earnings & Valuation
This table compares Synchrony Financial and Stonegate Mortgage Corp’s top-line revenue, earnings per share and valuation.
||Earnings Per Share
|Stonegate Mortgage Corp
Synchrony Financial has higher revenue and earnings than Stonegate Mortgage Corp. Stonegate Mortgage Corp is trading at a lower price-to-earnings ratio than Synchrony Financial, indicating that it is currently the more affordable of the two stocks.
This is a summary of current ratings and target prices for Synchrony Financial and Stonegate Mortgage Corp, as reported by MarketBeat.
||Strong Buy Ratings
|Stonegate Mortgage Corp
Synchrony Financial presently has a consensus target price of $36.50, suggesting a potential upside of 7.80%. Stonegate Mortgage Corp has a consensus target price of $6.00, suggesting a potential downside of 24.91%. Given Synchrony Financial’s stronger consensus rating and higher probable upside, equities analysts clearly believe Synchrony Financial is more favorable than Stonegate Mortgage Corp.
Institutional & Insider Ownership
88.3% of Synchrony Financial shares are owned by institutional investors. Comparatively, 44.3% of Stonegate Mortgage Corp shares are owned by institutional investors. 0.0% of Synchrony Financial shares are owned by company insiders. Comparatively, 44.5% of Stonegate Mortgage Corp shares are owned 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.
This table compares Synchrony Financial and Stonegate Mortgage Corp’s net margins, return on equity and return on assets.
||Return on Equity
||Return on Assets
|Stonegate Mortgage Corp
Synchrony Financial pays an annual dividend of $0.60 per share and has a dividend yield of 1.8%. Stonegate Mortgage Corp does not pay a dividend. Synchrony Financial pays out 22.9% of its earnings in the form of a dividend.
Synchrony Financial beats Stonegate Mortgage Corp on 10 of the 13 factors compared between the two stocks.
About Synchrony Financial
Synchrony Financial is a consumer financial services company. The Company provides a range of credit products through programs it has established with a group of national and regional retailers, local merchants, manufacturers, buying groups, industry associations and healthcare service providers. The Company’s revenue activities are managed through three sales platforms: Retail Card, Payment Solutions and CareCredit. It offers its credit products through its subsidiary, Synchrony Bank (the Bank). Through the Bank, it offers a range of deposit products insured by the Federal Deposit Insurance Corporation (FDIC), including certificates of deposit, individual retirement accounts (IRAs), money market accounts and savings accounts. The Company offers three types of credit products: credit cards, commercial credit products and consumer installment loans. The Company also offers a debt cancellation product. It offers two types of credit cards: private label credit cards and Dual Cards.
About Stonegate Mortgage Corp
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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