Critical Contrast: Atlanticus (NASDAQ:ATLC) versus Lendingclub (NASDAQ:HAPN)

Lendingclub (NASDAQ:HAPN) and Atlanticus (NASDAQ:ATLC) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, earnings, dividends, analyst recommendations, risk, valuation and institutional ownership.

Risk and Volatility

Lendingclub has a beta of 1.91, indicating that its stock price is 91% more volatile than the S&P 500. Comparatively, Atlanticus has a beta of 2.11, indicating that its stock price is 111% more volatile than the S&P 500.

Insider and Institutional Ownership

74.1% of Lendingclub shares are owned by institutional investors. Comparatively, 14.1% of Atlanticus shares are owned by institutional investors. 3.3% of Lendingclub shares are owned by insiders. Comparatively, 51.0% of Atlanticus shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Lendingclub and Atlanticus’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Lendingclub	18.67%	12.92%	1.66%
Atlanticus	5.80%	26.06%	2.15%

Analyst Recommendations

This is a breakdown of current ratings for Lendingclub and Atlanticus, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lendingclub	0	1	2	0	2.67
Atlanticus	0	2	5	1	2.88

Lendingclub currently has a consensus target price of $25.00, indicating a potential upside of 30.01%. Atlanticus has a consensus target price of $126.00, indicating a potential upside of 34.76%. Given Atlanticus’ stronger consensus rating and higher probable upside, analysts clearly believe Atlanticus is more favorable than Lendingclub.

Earnings & Valuation

This table compares Lendingclub and Atlanticus”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lendingclub	$1.05 billion	2.12	$135.68 million	$1.66	11.58
Atlanticus	$538.97 million	2.63	$122.20 million	$7.69	12.16

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

Summary

Atlanticus beats Lendingclub on 11 of the 15 factors compared between the two stocks.

About Lendingclub

LendingClub Corporation, operates as a bank holding company for LendingClub Bank, National Association that provides range of financial products and services through a technology-driven platform in the United States. The company provides commercial and industrial, commercial real estate, small business, and equipment loans, as well as leases equipment; and unsecured personal and auto, patient finance, and education finance loans. It also operates an online lending marketplace platform that connects borrowers and investors. LendingClub Corporation was incorporated in 2006 and is headquartered in San Francisco, California.

About Atlanticus

Atlanticus Holdings Corporation, a financial technology company, provides credit and related financial services and products to customers the United States. It operates in two segments, Credit as a Service, and Auto Finance. The Credit as a Service segment originates a range of consumer loan products, such as private label and general purpose credit cards originated by lenders through various channels, including retail and healthcare, direct mail solicitation, digital marketing, and partnerships with third parties; and offers credit to their customers for the purchase of various goods and services, including consumer electronics, furniture, elective medical procedures, healthcare, and home-improvements by partnering with retailers, healthcare providers, and other service providers. This segment also offers loan servicing, such as risk management and customer service outsourcing for third parties; and engages in testing and investment activities in consumer finance technology platforms. The Auto Finance segment purchases and/or services loans secured by automobiles from or for a pre-qualified network of independent automotive dealers and automotive finance companies in the buy-here, pay-here, and used car business. This segment also provides floor plan financing and installment lending products. It also invests in and services portfolios of credit card receivables. The company was founded in 1996 and is headquartered in Atlanta, Georgia.