Contrasting loanDepot (NYSE:LDI) & Kingsway Financial Services (NYSE:KWY)

loanDepot (NYSE:LDI) and Kingsway Financial Services (NYSE:KWY) are both small-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their earnings, institutional ownership, dividends, valuation, analyst recommendations, profitability and risk.

Profitability

This table compares loanDepot and Kingsway Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
loanDepot	-5.52%	-28.25%	-1.56%
Kingsway Financial Services	-6.53%	-63.24%	-4.41%

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for loanDepot and Kingsway Financial Services, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
loanDepot	2	2	0	0	1.50
Kingsway Financial Services	1	0	0	0	1.00

loanDepot presently has a consensus target price of $1.38, suggesting a potential upside of 120.00%. Given loanDepot’s stronger consensus rating and higher possible upside, equities analysts clearly believe loanDepot is more favorable than Kingsway Financial Services.

Earnings and Valuation

This table compares loanDepot and Kingsway Financial Services”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
loanDepot	$1.19 billion	0.18	-$62.65 million	($0.30)	-2.08
Kingsway Financial Services	$134.97 million	1.72	-$10.73 million	($0.30)	-26.70

Kingsway Financial Services has lower revenue, but higher earnings than loanDepot. Kingsway Financial Services is trading at a lower price-to-earnings ratio than loanDepot, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

loanDepot has a beta of 3.56, suggesting that its share price is 256% more volatile than the S&P 500. Comparatively, Kingsway Financial Services has a beta of 0.25, suggesting that its share price is 75% less volatile than the S&P 500.

Institutional and Insider Ownership

39.4% of loanDepot shares are held by institutional investors. Comparatively, 72.4% of Kingsway Financial Services shares are held by institutional investors. 65.9% of loanDepot shares are held by company insiders. Comparatively, 41.4% of Kingsway Financial Services shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

loanDepot beats Kingsway Financial Services on 9 of the 12 factors compared between the two stocks.

About loanDepot

loanDepot, Inc. engages in originating, financing, selling, and servicing residential mortgage loans in the United States. The company offers conventional agency-conforming and prime jumbo, federal assistance residential mortgage, and home equity loans. It also provides settlement services, which include captive title and escrow business; real estate services that cover captive real estate referral business; and insurance services, including services to homeowners, as well as other consumer insurance policies. The company was founded in 2010 and is headquartered in Irvine, California.

About Kingsway Financial Services

Kingsway Financial Services Inc., through its subsidiaries, engages in the extended warranty business services, asset management, and real estate businesses. The company operates through three segments: Extended Warranty, Leased Real Estate, and Kingsway Search Xcelerator. The Extended Warranty segment markets, sells, and administers vehicle service agreements and related products for new and used automobiles, motorcycles, and ATVs. This segment also sells new home warranty products, as well as offers uninsured warrant administration services to homebuilders and homeowners; markets and distributes warranty products to manufacturers, distributors, and installers of heating, ventilation and air conditioning, standby generator, commercial LED lighting, and commercial refrigeration equipment; and provides equipment breakdown and maintenance support services to companies. The Leased Real Estate segment owns a parcel of real property consisting of approximately 192 acres located in the State of Texas. The Kingsway Search Xcelerator offers outsourced finance and human resources consulting services, including operational accounting, such as bookkeeping, accounting, financial reporting, and analysis and strategic finance services; technical accounting comprising initial public offerings, SEC reporting, and international consolidation services; human resources, workforce management, and compliance support services; and advisory services. The company offers its products and services through credit unions, dealers, homebuilders, and consumers. Kingsway Financial Services Inc. was incorporated in 1989 and is based in Itasca, Illinois.