Comparing NetSpend Holdings (NTSP) and Capital One Financial Corporation (COF)

Capital One Financial Corporation (NYSE: COF) and NetSpend Holdings (NASDAQ:NTSP) are both consumer credit cards services companies, but which is the superior stock? We will compare the two companies based on the strength of their profitability, valuation, earnings, analyst recommendations, dividends, institutional ownership and risk.

Profitability

This table compares Capital One Financial Corporation and NetSpend Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Capital One Financial Corporation 13.34% 8.25% 1.13%
NetSpend Holdings N/A N/A N/A

Valuation and Earnings

This table compares Capital One Financial Corporation and NetSpend Holdings’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Capital One Financial Corporation $27.52 billion 1.55 $3.75 billion $7.13 12.32
NetSpend Holdings N/A N/A N/A $0.44 N/A

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

Dividends

Capital One Financial Corporation pays an annual dividend of $1.60 per share and has a dividend yield of 1.8%. NetSpend Holdings does not pay a dividend. Capital One Financial Corporation pays out 22.4% of its earnings in the form of a dividend. Capital One Financial Corporation has increased its dividend for 4 consecutive years.

Institutional and Insider Ownership

87.2% of Capital One Financial Corporation shares are owned by institutional investors. 1.7% of Capital One Financial Corporation shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings for Capital One Financial Corporation and NetSpend Holdings, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Capital One Financial Corporation 2 11 11 1 2.44
NetSpend Holdings 0 0 0 0 N/A

Capital One Financial Corporation presently has a consensus price target of $95.20, suggesting a potential upside of 8.39%.

Summary

Capital One Financial Corporation beats NetSpend Holdings on 11 of the 12 factors compared between the two stocks.

Capital One Financial Corporation Company Profile

Capital One Financial Corporation is a diversified financial services holding company. The Company, along with its subsidiaries, offers a range of financial products and services to consumers, small businesses and commercial clients through branches, the Internet and other distribution channels. The Company’s segments include Credit Card, Consumer Banking, Commercial Banking and Other. The Credit Card segment consists of its domestic consumer and small business card lending, and the international card lending businesses in Canada and the United Kingdom. The Consumer Banking segment consists of its branch-based lending and deposit gathering activities for consumers and small businesses, national deposit gathering, national auto lending and consumer home loan lending and servicing activities. The Commercial Banking consists of its lending, deposit gathering and treasury management services to commercial real estate, and commercial and industrial customers.

NetSpend Holdings Company Profile

NetSpend Holdings, Inc. (NetSpend) is a provider of general-purpose reloadable prepaid debit cards (GPR) cards, and related alternative financial services to underbanked consumers in the United States. NetSpend’s GPR cards are tied to the Federal Deposit Insurance Corporation (FDIC)-insured depository accounts and can be used to make purchase transactions at any merchant that participates in the MasterCard, Visa or PULSE networks and to withdraw funds at participating automated teller machines (ATMs). The Company also offers to its cardholders direct deposit, interest-bearing savings accounts, bill pay and card-to-card transfer functionality, personal financial management tools and online and mobile phone card account access. As of December 31, 2010, the Company marketed its GPR cards through approximately 750 retail distributors at approximately 39,000 locations. As of August 21, 2010, the Company ceased marketing gift cards.

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