LoanDepot, Inc. (LDI), in Foothill Ranch, California, is a technology-driven, customer-centric residential mortgage platform. Additionally, its technology platform, mello, works across all aspects of its business, including lead generation, origination, and data integration. By comparison, diversified consumer finance company CURO Group Holdings Corp. (CURO) offers unsecured installment loans, secured installment loans, open-ended loans and lump-sum loans. CURO is based at Wichita, Kans.
Even though interest rates remained close to zero for an extended period, the financial sector rebounded significantly earlier this year as the economy gradually recovered thanks to solid progress on the vaccine front. COVID-19. In addition, following yesterday’s Federal Reserve announcement, half of U.S. Federal Reserve policymakers now plan to start increase interest rates next year, which should bode well for the financial sector. Thus, LDI and CURO could benefit from it.
LDI fell 12.9% over the past month, while CURO lost 1%. Additionally, in terms of performance over the past six months, CURO is the clear winner with 9.5% gains over LDI’s negative returns.
But which of these two titles is the best buy now? Let’s find out.
Several law firms have launched LDI surveys regarding alleged violations of federal securities laws. For example, it is alleged that the company made false and misleading statements in the market. In addition, its refinancing operations were in decline at the time of the IPO due to competition, among other factors.
On June 9, CURO announced several benefits of completing the business combination between Katapult Holding, Inc. and FinServ Acquisition Corp. CURO CEO Don Gayhardt said, “We believe our investment in Katapult will allow CURO and its stakeholders to continue to participate in the rapidly growing e-commerce point-of-sale financing space in the United States. United.
Recent financial results
LDI’s adjusted total revenue decreased 28.5% year-on-year to $ 825.33 million for the second quarter ended June 30, 2021. Company adjusted net profit decreased 88.3% year-on-year to $ 57.50 million, while its adjusted EPS was down 81.8%. sequentially at $ 0.18. In addition, its Adjusted EBITDA amounted to $ 109.26 million, compared to $ 682.59 million for the period of the previous year.
For the second quarter ended June 30, 2021, CURO’s net sales increased 8.1% year-over-year to $ 142.53 million. However, while its adjusted net income fell 21.5% year-on-year to $ 17.39 million, its adjusted EPS fell 24.5% year-on-year to $ 0.40. In addition, its Adjusted EBITDA decreased 1.6% year-over-year to $ 50.30 million.
Expected financial performance
LDI’s revenue is expected to decline 46.6% for the quarter ended December 31, 2021 and 10% in its fiscal year 2022. Additionally, its EPS is expected to decline 1.1% next year . In addition, its EPS is expected to decline at a rate of 14.7% per year over the next five years.
By comparison, analysts expect CURO’s revenue to grow 14.4% for the quarter ending December 31, 2021 and 28.7% in its fiscal year 2022. In addition, the EPS of the Company is expected to grow 63.3% in fiscal 2022. In addition, its EPS is expected to grow at a rate of 3.6% per year over the next five years.
LDI’s revenue of $ 4.94 billion over the past 12 months compares to CURO’s $ 768.33 million. Additionally, LDI is more profitable, with gross profit and net margins of 94.48% and 41.85%, respectively, compared to 73.7% and 19.21% for CURO.
In terms of 12-month rolling P / S, CURO is currently trading at 0.84x which is higher than LDI’s 0.18x. In addition, the 2.46x guardrail from CURO-12 months P / B is 40.6% higher than the 1.75x of LDI.
While CURO seems much more expensive than LDI, we believe it is worth paying this premium given CURO’s significantly higher revenue and profit growth potential.
LDI has an overall rating of C, which equates to Neutral in our POWR odds system. In comparison, CURO has an overall rating of B, which translates into a buy. POWR scores are calculated taking into account 118 separate factors, each factor being weighted to an optimal degree.
LDI has a C rating for quality, which is in line with 1.09% CAPEX / 12 month sales, which is below the industry average of 1.73%. On the flip side, CURO has a B grade for quality, which is its 12-month rolling CAPEX / S of 1.74%, which is above the industry average of 1.73%.
LDI has a C rating for Momentum, which is in line with its 65.6% loss in the past six months, while CURO’s 9.5% gains in the past six months have seen it achieve a B rating for Momentum.
Additionally, LDI has a C rating for Sentiment, consistent with negative analyst sentiment. CURO has a B rating for sentiment.
Of the 51 actions of Consumer financial services Industry, LDI is ranked No.27 while CURO is ranked No.4.
In addition to the POWR ratings I just outlined, we also rated stocks for value, growth and stability. Click here to view all LDI reviews. Also get all CURO ratings here.
As interest rates could be raised earlier than expected, the financial sector should benefit significantly. So while LDI and CURO should eventually win, we think it might be wise to grab CURO shares now due to their better finances and significantly higher revenue and EPS growth estimates.
Our research shows that the chances of success increase when investing in stocks with an overall strong buy or buy rating. See all the top rated stocks in the consumer financial services industry here.
CURO shares remained unchanged in pre-market on Thursday. Year-to-date, CURO has gained 11.61%, compared to an 18.97% increase in the benchmark S&P 500 over the same period.
About the Author: Manisha Chatterjee
Since she was young, Manisha has had a strong interest in the stock market. She majored in economics in college and has a passion for writing, which led to her career as a research analyst. Following…