PennyMac Financial Services (NYSE:PFSI) and loanDepot (NYSE:LDI) Financial Survey

PennyMac Financial Services (NYSE:PFSI) and loanDepot (NYSE:LDI) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, risk, profitability, dividends, earnings and analyst recommendations.

Analyst Ratings

This is a summary of recent recommendations and price targets for PennyMac Financial Services and loanDepot, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PennyMac Financial Services	0	1	5	0	2.83
loanDepot	1	1	0	0	1.50

PennyMac Financial Services currently has a consensus price target of $120.67, suggesting a potential upside of 17.83%. loanDepot has a consensus price target of $1.98, suggesting a potential upside of 54.30%. Given loanDepot’s higher possible upside, analysts plainly believe loanDepot is more favorable than PennyMac Financial Services.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
PennyMac Financial Services	20.27%	14.78%	2.37%
loanDepot	-7.74%	-18.41%	-1.57%

Valuation and Earnings

This table compares PennyMac Financial Services and loanDepot”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PennyMac Financial Services	$1.59 billion	3.32	$311.42 million	$6.52	15.71
loanDepot	$1.06 billion	0.40	-$98.33 million	($0.45)	-2.84

PennyMac Financial Services has higher revenue and earnings than loanDepot. loanDepot 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.

Insider & Institutional Ownership

57.9% of PennyMac Financial Services shares are held by institutional investors. Comparatively, 39.4% of loanDepot shares are held by institutional investors. 15.8% of PennyMac Financial Services shares are held by insiders. Comparatively, 78.1% of loanDepot shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Risk & Volatility

PennyMac Financial Services has a beta of 1.53, indicating that its stock price is 53% more volatile than the S&P 500. Comparatively, loanDepot has a beta of 3.33, indicating that its stock price is 233% more volatile than the S&P 500.

Summary

PennyMac Financial Services beats loanDepot 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 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.