LendingTree (NASDAQ: TREE) and Ally Financial (NYSE:ALLY) are both mid-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitabiliy, dividends, institutional ownership, valuation, earnings, risk and analyst recommendations.
Risk and Volatility
LendingTree has a beta of 1.54, suggesting that its stock price is 54% more volatile than the S&P 500. Comparatively, Ally Financial has a beta of 1.39, suggesting that its stock price is 39% more volatile than the S&P 500.
Valuation & Earnings
This table compares LendingTree and Ally Financial’s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| LendingTree | $422.20 million | 5.15 | $63.04 million | $2.22 | 81.95 |
| Ally Financial | $6.06 billion | 1.74 | $1.02 billion | $2.12 | 10.34 |
Ally Financial has higher revenue and earnings than LendingTree. Ally Financial is trading at a lower price-to-earnings ratio than LendingTree, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares LendingTree and Ally Financial’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| LendingTree | 6.79% | 18.12% | 13.52% |
| Ally Financial | 15.68% | 7.63% | 0.64% |
Institutional & Insider Ownership
76.6% of LendingTree shares are held by institutional investors. Comparatively, 98.8% of Ally Financial shares are held by institutional investors. 21.9% of LendingTree shares are held by insiders. Comparatively, 0.2% of Ally Financial shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Dividends
Ally Financial pays an annual dividend of $0.32 per share and has a dividend yield of 1.5%. LendingTree does not pay a dividend. Ally Financial pays out 15.1% of its earnings in the form of a dividend.
Analyst Ratings
This is a breakdown of recent ratings and recommmendations for LendingTree and Ally Financial, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| LendingTree | 0 | 0 | 11 | 0 | 3.00 |
| Ally Financial | 1 | 3 | 11 | 0 | 2.67 |
LendingTree currently has a consensus target price of $165.80, indicating a potential downside of 8.86%. Ally Financial has a consensus target price of $24.92, indicating a potential upside of 13.62%. Given Ally Financial’s higher probable upside, analysts plainly believe Ally Financial is more favorable than LendingTree.
Summary
LendingTree beats Ally Financial on 9 of the 15 factors compared between the two stocks.
LendingTree Company Profile
LendingTree, Inc. (LendingTree) is engaged in operating an online loan marketplace for consumers seeking loans and other credit-based offerings. The Company’s online marketplace provides consumers with access to product offerings from various lenders, which it refers to as Network Lenders, including mortgage loans, home equity loans and lines of credit, reverse mortgage loans, auto loans, credit cards, personal loans, student loans, small business loans and other related offerings. In addition, the Company offers tools and resources, including free credit scores that facilitate comparison shopping for these loans and other credit-based offerings. The Company offers its products in categories, including mortgage products and non-mortgage products. Its mortgage products category includes its purchase and refinance products. Its non-mortgage products include lending products and other products.
Ally Financial Company Profile
Ally Financial Inc. is a digital financial services company. The Company is a bank and financial holding company. Its segments include Automotive Finance operations, Insurance operations, Mortgage Finance operations, Corporate Finance operations, and Corporate and Other. The Automotive Finance operations segment provides the United States-based automotive financing services to consumers and automotive dealers, and automotive and equipment financing services to companies and municipalities. The Insurance operations segment offers both consumer finance protection and insurance products sold through the automotive dealer channel, and commercial insurance products sold directly to dealers. The Mortgage Finance operations segment consists of the management of a held-for-investment consumer mortgage finance loan portfolio. The Corporate Finance operations segment provides senior secured leveraged cash flow and asset-based loans to mostly the United States-based middle market companies.
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