OneMain Holdings (OMF) and LendingClub Corporation (LC) Critical Review

LendingClub Corporation (NYSE: LC) and OneMain Holdings (NYSE:OMF) are both mid-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, earnings, profitability, dividends, risk, institutional ownership and analyst recommendations.

Profitability

This table compares LendingClub Corporation and OneMain Holdings’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
LendingClub Corporation	-24.52%	-11.97%	-2.18%
OneMain Holdings	3.63%	14.31%	2.42%

Earnings and Valuation

This table compares LendingClub Corporation and OneMain Holdings’ revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
LendingClub Corporation	$511.51 million	4.77	-$123.42 million	($0.30)	-19.77
OneMain Holdings	$1.84 billion	1.99	$127.18 million	$0.94	28.74

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

Institutional & Insider Ownership

91.7% of LendingClub Corporation shares are held by institutional investors. Comparatively, 95.5% of OneMain Holdings shares are held by institutional investors. 11.4% of LendingClub Corporation shares are held by company insiders. Comparatively, 57.7% of OneMain Holdings shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings for LendingClub Corporation and OneMain Holdings, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
LendingClub Corporation	0	9	7	0	2.44
OneMain Holdings	0	9	7	0	2.44

LendingClub Corporation currently has a consensus target price of $6.82, indicating a potential upside of 14.95%. OneMain Holdings has a consensus target price of $29.06, indicating a potential upside of 7.56%. Given LendingClub Corporation’s higher possible upside, equities analysts plainly believe LendingClub Corporation is more favorable than OneMain Holdings.

Risk and Volatility

LendingClub Corporation has a beta of 1.86, meaning that its share price is 86% more volatile than the S&P 500. Comparatively, OneMain Holdings has a beta of 2.85, meaning that its share price is 185% more volatile than the S&P 500.

Summary

OneMain Holdings beats LendingClub Corporation on 9 of the 11 factors compared between the two stocks.

About LendingClub Corporation

LendingClub Corporation provides online marketplace to connect borrowers and investors. Consumers and small business owners borrow through Lending Club. Investors use Lending Club to earn risk-adjusted returns from an asset class that has been closed to many investors and only available on a limited basis to large institutional investors. Its technology automates aspects of operations, including the borrower application process, data gathering, credit decisioning and scoring, loan funding, investing and servicing, regulatory compliance and fraud detection. Its platform offers analytical tools and data to enable investors to make decisions and assess their portfolios. Its technology platform has allowed it to expand its offerings from personal loans to include small business loans, and to expand investor classes from individuals to institutions and create various investment vehicles.

About OneMain Holdings

OneMain Holdings, Inc. is a financial services holding company. The Company is a consumer finance company, which is engaged in providing personal loan products; credit and non-credit insurance, and service loans owned by it and service or subservice loans owned by third-parties. The Company’s segments include Consumer and Insurance; Acquisitions and Servicing; Real Estate, and Other. It is engaged in pursuing strategic acquisitions and dispositions of assets and businesses, including loan portfolios or other financial assets. The Company originates and services personal loans (secured and unsecured) through two business divisions: branch operations and centralized operations. As of December 31, 2016, its combined branch operations included over 1,800 branch offices in 44 states. It offers optional credit insurance products to its customers, including credit life insurance, credit disability insurance, credit involuntary unemployment insurance and collateral protection insurance.