Financial Contrast: Lendingclub (NASDAQ:HAPN) vs. Ally Financial (NYSE:ALLY)

Lendingclub (NASDAQ:HAPN) and Ally Financial (NYSE:ALLY) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, risk, earnings, profitability, valuation and dividends.

Earnings & Valuation

This table compares Lendingclub and Ally Financial”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lendingclub	$998.85 million	1.68	$135.68 million	$1.66	8.74
Ally Financial	$7.91 billion	1.51	$852.00 million	$4.24	9.26

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

Risk and Volatility

Lendingclub has a beta of 1.88, meaning that its share price is 88% more volatile than the S&P 500. Comparatively, Ally Financial has a beta of 1.11, meaning that its share price is 11% more volatile than the S&P 500.

Profitability

This table compares Lendingclub and Ally Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Lendingclub	18.67%	12.92%	1.66%
Ally Financial	16.84%	12.11%	0.81%

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Lendingclub and Ally Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lendingclub	0	1	2	0	2.67
Ally Financial	1	5	10	1	2.65

Lendingclub presently has a consensus price target of $25.00, suggesting a potential upside of 72.29%. Ally Financial has a consensus price target of $48.21, suggesting a potential upside of 22.83%. Given Lendingclub’s stronger consensus rating and higher probable upside, equities analysts clearly believe Lendingclub is more favorable than Ally Financial.

Institutional & Insider Ownership

74.1% of Lendingclub shares are held by institutional investors. Comparatively, 88.8% of Ally Financial shares are held by institutional investors. 3.3% of Lendingclub shares are held by insiders. Comparatively, 0.5% of Ally Financial shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

Lendingclub beats Ally Financial on 9 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 Ally Financial

Ally Financial Inc., a digital financial-services company, provides various digital financial products and services in the United States, Canada, and Bermuda. The company operates through Automotive Finance Operations, Insurance Operations, Mortgage Finance Operations, and Corporate Finance Operations segments. The Automotive Finance Operations segment offers automotive financing services, including providing retail installment sales contracts, loans and operating leases, term loans to dealers, financing dealer floorplans and other lines of credit to dealers, warehouse lines to automotive retailers, and fleet financing. It also provides financing services to companies and municipalities for the purchase or lease of vehicles, and vehicle-remarketing services. The Insurance Operations segment offers consumer finance protection and insurance products through the automotive dealer channel, and commercial insurance products directly to dealers. This segment provides vehicle service and maintenance contract, and guaranteed asset protection products; and underwrites commercial insurance coverages, which primarily insure dealers’ vehicle inventory. The Mortgage Finance Operations segment manages consumer mortgage loan portfolio that includes bulk purchases of jumbo and low-to-moderate income mortgage loans originated by third parties, as well as direct-to-consumer mortgage offerings. The Corporate Finance Operations segment provides senior secured leveraged cash flow and asset-based loans to middle market companies; leveraged loans; and commercial real estate product to serve companies in the nursing facilities, senior housing, and medical office buildings. It also offers commercial banking products and services. In addition, it provides securities brokerage and investment advisory services. The company was formerly known as GMAC Inc. and changed its name to Ally Financial Inc. in May 2010. Ally Financial Inc. was founded in 1919 and is based in Detroit, Michigan.