Head-To-Head Survey: Ocwen (OCN) vs. Nationstar Mortgage (NSM)

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

Valuation & Earnings

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This table compares Ocwen and Nationstar Mortgage’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ocwen $1.19 billion 0.46 -$127.96 million ($0.94) -4.39
Nationstar Mortgage $1.65 billion 1.08 $30.00 million $1.48 12.31

Nationstar Mortgage has higher revenue and earnings than Ocwen. Ocwen is trading at a lower price-to-earnings ratio than Nationstar Mortgage, 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 Ocwen and Nationstar Mortgage, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ocwen 0 4 0 0 2.00
Nationstar Mortgage 2 1 2 0 2.00

Ocwen presently has a consensus target price of $3.33, suggesting a potential downside of 19.29%. Nationstar Mortgage has a consensus target price of $18.30, suggesting a potential upside of 0.44%. Given Nationstar Mortgage’s higher probable upside, analysts plainly believe Nationstar Mortgage is more favorable than Ocwen.

Risk & Volatility

Ocwen has a beta of 1.19, meaning that its share price is 19% more volatile than the S&P 500. Comparatively, Nationstar Mortgage has a beta of 1.14, meaning that its share price is 14% more volatile than the S&P 500.

Insider & Institutional Ownership

52.2% of Ocwen shares are owned by institutional investors. Comparatively, 98.8% of Nationstar Mortgage shares are owned by institutional investors. 2.4% of Ocwen shares are owned by company insiders. Comparatively, 0.8% of Nationstar Mortgage shares are owned by company 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.

Profitability

This table compares Ocwen and Nationstar Mortgage’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ocwen -10.71% -20.31% -1.47%
Nationstar Mortgage 1.82% 9.24% 0.85%

Summary

Nationstar Mortgage beats Ocwen on 10 of the 12 factors compared between the two stocks.

Ocwen Company Profile

Ocwen Financial Corporation, a financial services holding company, originates and services loans in the United States, the United States Virgin Islands, India, and Philippines. Its Servicing segment provides residential and commercial mortgage loan servicing, special servicing, and asset management services to owners of mortgage loans and foreclosed real estate. This segment's residential servicing portfolio includes conventional, government insured, and non-agency loans. The company's Lending segment originates and purchases conventional and government-insured residential forward and reverse mortgage loans primarily through its correspondent lending arrangements, broker relationships, and directly with mortgage customers. The company also provides short-term inventory-secured loans to independent used car dealers to finance their inventory. Ocwen Financial Corporation was founded in 1988 and is headquartered in West Palm Beach, Florida.

Nationstar Mortgage 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.

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