Orix (IX) & PHH (PHH) Critical Contrast

Orix (NYSE: IX) and PHH (NYSE:PHH) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, dividends, risk, earnings, analyst recommendations, valuation and profitability.

Institutional & Insider Ownership

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1.9% of Orix shares are held by institutional investors. Comparatively, 98.6% of PHH shares are held by institutional investors. 0.1% of Orix shares are held by company insiders. Comparatively, 2.5% of PHH shares are held 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.

Analyst Ratings

This is a breakdown of recent recommendations for Orix and PHH, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Orix 0 0 0 0 N/A
PHH 0 2 0 0 2.00

PHH has a consensus target price of $13.25, indicating a potential upside of 24.18%. Given PHH’s higher possible upside, analysts clearly believe PHH is more favorable than Orix.

Dividends

Orix pays an annual dividend of $1.07 per share and has a dividend yield of 1.2%. PHH does not pay a dividend. Orix pays out 110.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Volatility & Risk

Orix has a beta of 1.5, meaning that its share price is 50% more volatile than the S&P 500. Comparatively, PHH has a beta of 1.41, meaning that its share price is 41% more volatile than the S&P 500.

Valuation and Earnings

This table compares Orix and PHH’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Orix $24.78 billion 0.90 $2.54 billion $0.97 89.99
PHH $456.00 million 0.76 -$217.00 million ($4.47) -2.39

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

Profitability

This table compares Orix and PHH’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Orix 10.61% 11.36% 2.71%
PHH -47.59% -26.45% -8.51%

Summary

Orix beats PHH on 10 of the 14 factors compared between the two stocks.

Orix Company Profile

ORIX Corporation provides financial services. It operates through six segments: Corporate Financial Services, Maintenance Leasing, Real Estate, Investment and Operation, Retail, and Overseas Business. The Corporate Financial Services segment engages in lending, leasing, and fee businesses. The Maintenance Leasing segment is involved in leasing, automobile rental, and car sharing activities; lease and rental of precision measuring, information technology related, and medical equipment; and the sale of software packages, as well as the provision of technical support, equipment calibration, and asset management services. The Real Estate segment engages in the development and leasing of office buildings, commercial properties, logistics centers, and residences; and operation of hotels, Japanese inns, aquariums, golf courses, training facilities, senior housings, baseball stadiums, and theaters. This segment also offers REIT asset management and real estate investment advisory services. The Investment and Operation segment is involved in the collection and disposal of waste from end-of-lease assets; solar, wind, and geothermal power generation; investment in private equities and non-performing loans; and operation of the Kansai and Osaka International Airport as a concession. The Retail segment engages in life insurance, banking, and card loan businesses. The Overseas Business segment is involved in leasing, lending, investment in bonds, investment banking, asset management, and ship-and aircraft-related operations. The company was formerly known as Orient Leasing Co., Ltd. and changed its name to ORIX Corporation in 1989. ORIX Corporation was founded in 1964 and is headquartered in Tokyo, Japan.

PHH Company Profile

PHH Corporation is a standalone mortgage company. The Company provides outsourced mortgage banking services to a range of clients, including financial institutions and real estate brokers throughout the United States, and is focused on originating, selling, servicing and subservicing residential mortgage loans through its subsidiary, PHH Mortgage Corporation and its subsidiaries. It operates through two segments: Mortgage Production and Mortgage Servicing. The Mortgage Production segment provides mortgage loan origination services and sells mortgage loans. The Mortgage Servicing segment performs servicing activities for loans originated by the Company and mortgage servicing rights purchased from others, and acts as a subservicer for certain clients that own the underlying mortgage servicing rights. The Mortgage Production segment provides private label mortgage services to financial institutions and real estate brokers, and sources mortgage loans through its retail platform.

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