PennyMac Financial Services (NYSE:PFSI – Get Free Report) and Better Home & Finance (NASDAQ:BETR – Get Free Report) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, institutional ownership, valuation, dividends, risk and profitability.
Volatility & Risk
PennyMac Financial Services has a beta of 1.59, suggesting that its stock price is 59% more volatile than the S&P 500. Comparatively, Better Home & Finance has a beta of 1.89, suggesting that its stock price is 89% more volatile than the S&P 500.
Profitability
This table compares PennyMac Financial Services and Better Home & Finance’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| PennyMac Financial Services | 22.00% | 12.18% | 1.95% |
| Better Home & Finance | -153.25% | N/A | -16.80% |
Earnings and Valuation
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| PennyMac Financial Services | $1.59 billion | 4.08 | $311.42 million | $7.21 | 17.45 |
| Better Home & Finance | $108.49 million | 8.01 | -$206.29 million | ($13.21) | -4.30 |
PennyMac Financial Services has higher revenue and earnings than Better Home & Finance. Better Home & Finance is trading at a lower price-to-earnings ratio than PennyMac Financial Services, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
57.9% of PennyMac Financial Services shares are held by institutional investors. Comparatively, 20.9% of Better Home & Finance shares are held by institutional investors. 15.8% of PennyMac Financial Services shares are held by company insiders. Comparatively, 23.6% of Better Home & Finance shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
Analyst Recommendations
This is a breakdown of current recommendations for PennyMac Financial Services and Better Home & Finance, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| PennyMac Financial Services | 0 | 1 | 5 | 0 | 2.83 |
| Better Home & Finance | 0 | 0 | 0 | 0 | 0.00 |
PennyMac Financial Services currently has a consensus price target of $119.33, suggesting a potential downside of 5.15%. Given PennyMac Financial Services’ stronger consensus rating and higher probable upside, analysts clearly believe PennyMac Financial Services is more favorable than Better Home & Finance.
Summary
PennyMac Financial Services beats Better Home & Finance on 11 of the 14 factors compared between the two stocks.
About PennyMac Financial Services
PennyMac Financial Services, Inc., through its subsidiaries, engages in the mortgage banking and investment management activities in the United States. The company operates through three segments: Production, Servicing, and Investment Management. The Production segment is involved in the origination, acquisition, and sale of loans. This segment sources residential conventional and government-insured or guaranteed mortgage loans through correspondent production, consumer direct lending, and broker direct lending. The Servicing segment performs loan servicing for both newly originated loans that are under holding for sale and loans services for others. The segment performs loan administration, collection, and default management activities, including the collection and remittance of loan payments; responds to customer inquiries; provides accounting for principal and interest; holds custodial funds for the payment of property taxes and insurance premiums; counsels delinquent borrowers; and supervising foreclosures and property dispositions, as well as administers loss mitigation activities, such as modification and forbearance programs. The Investment Management segment is involved in sourcing, performing diligence, bidding, and closing investment asset acquisitions; managing correspondent production activities for PennyMac Mortgage Investment Trust; and managing acquired assets. The company was founded in 2008 and is headquartered in Westlake Village, California.
About Better Home & Finance
Better Home & Finance Holding Co. engages in the provision of comprehensive homeownership services. It offers mortgage loans, real estate agent services, and title and homeowner’s insurance services. The company was founded in 2014 and is headquartered in New York, NY.
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