Jack Henry & Associates (NASDAQ:JKHY) and UWM (NYSE:UWMC) Critical Contrast

UWM (NYSE:UWMC) and Jack Henry & Associates (NASDAQ:JKHY) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, dividends, risk, profitability, valuation and earnings.

Profitability

This table compares UWM and Jack Henry & Associates’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
UWM	-1.04%	-6.20%	-0.50%
Jack Henry & Associates	19.76%	23.49%	16.34%

Risk and Volatility

UWM has a beta of 1.76, indicating that its stock price is 76% more volatile than the S&P 500. Comparatively, Jack Henry & Associates has a beta of 0.56, indicating that its stock price is 44% less volatile than the S&P 500.

Institutional & Insider Ownership

53.6% of UWM shares are owned by institutional investors. Comparatively, 98.8% of Jack Henry & Associates shares are owned by institutional investors. 80.9% of UWM shares are owned by insiders. Comparatively, 0.6% of Jack Henry & Associates shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings and Valuation

This table compares UWM and Jack Henry & Associates”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
UWM	$3.16 billion	0.61	$27.38 million	($0.08)	-15.06
Jack Henry & Associates	$2.54 billion	4.07	$502.78 million	$6.97	21.20

Jack Henry & Associates has lower revenue, but higher earnings than UWM. UWM is trading at a lower price-to-earnings ratio than Jack Henry & Associates, indicating that it is currently the more affordable of the two stocks.

Dividends

UWM pays an annual dividend of $0.40 per share and has a dividend yield of 33.2%. Jack Henry & Associates pays an annual dividend of $2.44 per share and has a dividend yield of 1.7%. UWM pays out -500.0% of its earnings in the form of a dividend. Jack Henry & Associates pays out 35.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Jack Henry & Associates has raised its dividend for 35 consecutive years. UWM is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of current ratings and target prices for UWM and Jack Henry & Associates, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
UWM	2	6	6	0	2.29
Jack Henry & Associates	0	5	12	1	2.78

UWM currently has a consensus target price of $4.01, indicating a potential upside of 233.08%. Jack Henry & Associates has a consensus target price of $192.18, indicating a potential upside of 30.07%. Given UWM’s higher possible upside, research analysts plainly believe UWM is more favorable than Jack Henry & Associates.

Summary

Jack Henry & Associates beats UWM on 12 of the 18 factors compared between the two stocks.

About UWM

UWM Holdings Corporation engages in the residential mortgage lending business in the United States. The company offers mortgage loans through wholesale channel. It originates primarily conforming and government loans. UWM Holdings Corporation was founded in 1986 and is headquartered in Pontiac, Michigan.

About Jack Henry & Associates

Jack Henry & Associates, Inc. is a financial technology company, which engages in the provision of technology solutions and payment processing services. It operates through the following segments: Core, Payments, Complementary, and Corporate and Other. The Core segment provides core information processing platforms to banks and credit unions which consist of integrated applications required to process deposit, loan, and general ledger transactions, and maintain centralized customer and member information. The Payments segment includes secure payment processing tools and services including ATM, debit, and credit card processing services, online and mobile bill pay solutions, ACH origination and remote deposit capture processing, and risk management products and services. The Complementary segment focuses on additional software, hosted processing platforms, and services including call center support, network security management, consulting, and monitoring. The Corporate and Other segment offers hardware and other products. The company was founded by Jerry D. Hall and John W. Henry in 1976 and is headquartered in Monett, MO.