LoanDepot, Inc. (LDI), in Foothill Ranch, California, is a customer-centric and technology-driven platform for residential mortgages. In addition, its technology platform mello works in all aspects of its business, including lead generation, origination and data integration. By comparison, diversified consumer finance firm CURO Group Holdings Corp. (CURO) offers unsecured installment loans, secured installment loans, perpetual loans and individual loans. CURO is based in Wichita, Kans.
Although interest rates were held near zero for an extended period of time, the financial sector rebounded significantly earlier this year as the economy gradually recovered thanks to solid progress on the COVID-19 vaccination. In addition, half of the Fed’s decision-makers are expecting following the Fed’s announcement yesterday Rate hike next yearwhich should bode well for the financial sector. LDI and CURO could therefore benefit.
LDI is down 12.9% last month while CURO is down 1%. In terms of the performance of the last six months, CURO is the clear winner with a plus of 9.5% compared to the negative returns of LDI.
But which of these two stocks is better to buy now? Let’s find out.
Several law firms have been established Research on LDI of alleged violations of federal securities laws. For example, it is alleged that the company provided false and misleading information to the market. In addition, the sources of refinancing were declining at the time of the IPO, partly due to competition.
On June 9, CURO announced several benefits from the completion of the business combination between Katapult Holding, Inc. and FinServ Acquisition Corp. known. CURO CEO Don Gayhardt said, “We believe our investment in Katapult will enable CURO and its stakeholders to continue participating in the rapidly growing US e-commerce point-of-sale financial space.”
Recent financial results
LDI’s total adjusted revenue for the second quarter ended June 30, 2021 declined 28.5% year over year to $ 825.33 million consecutively to $ 0.18. Adjusted EBITDA was also $ 109.26 million compared to $ 682.59 million for the same period last 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 adjusted net income declined 21.5% year-over-year to $ 17.39 million, adjusted earnings per share declined 24.5% year-over-year to $ 0.40. Adjusted EBITDA also decreased 1.6% year over year to $ 50.30 million.
Expected financial performance
LDI revenue is projected to decrease 46.6% in the quarter ended December 31, 2021 and 10% in the 2022 fiscal year. Earnings per share are also expected to drop 1.1% over the next year. Additionally, earnings per share are expected to decline 14.7% per year over the next five years.
By comparison, analysts expect CURO’s revenue to grow 14.4% for the quarter ended December 31, 2021 and 28.7% for the 2022 fiscal year. Additionally, the company’s EPS is expected to increase 63.3% in fiscal 2022. The EPS is also expected to grow at an annual rate of 3.6% over the next five years.
LDI’s revenue of $ 4.94 billion for the past 12 months compares to CURO’s $ 768.33 million. Additionally, LDI is more profitable with gross profit and net profit margins of 94.48% and 41.85%, respectively, compared to CURO’s 73.7% and 19.21%, respectively.
In terms of the 12 month trailing P / S, CURO is currently trading at 0.84x, which is higher than LDI’s 0.18x. In addition, CUROs is 2.46x railing-12 months P / B The ratio is 40.6% higher than 1.75 times LDI.
While CURO looks a lot more expensive than LDI, we think it’s worth paying that premium, given CURO’s significantly higher sales and earnings growth potential.
LDI has an overall C rating, which corresponds to our proprietary neutral POWR ratings System. In comparison, CURO has an overall rating of B, which equates to a purchase. The POWR ratings are calculated taking 118 different factors into account, with each factor being optimally weighted.
LDI has a C-rating for quality that is in sync with 1.09% trailing 12-month CAPEX / sales, which is lower than the industry average of 1.73%. On the flip side, CURO has a B grade for quality, which is in line with its 1.74% trailing 12-month CAPEX / S, which is above the industry average of 1.73%.
LDI has a C-rating for momentum that is consistent with losing 65.6% over the past six months, while CURO’s 9.5% gains over the past six months helped give it a B-rating for momentum obtain.
Additionally, LDI has a C-rating for sentiment, which is consistent with analyst unfavorable sentiment. CURO has the grade B for sentiment.
Of the 51 shares in the Consumer financial services In industry, LDI ranks 27th while CURO ranks 4th.
In addition to the POWR ratings just highlighted, we’ve also rated the stocks for value, growth, and stability. Click here to view all LDI ratings. Get all reviews from CURO too here.
With rates likely to hike earlier than expected, the financial sector should benefit significantly. While both LDI and CURO are likely to gain at some point, we believe it advisable to buy CURO’s shares now due to better financial data and significantly higher sales and EPS growth estimates.
Our research shows that investing in stocks with an overall rating of Strong Buy or Buy increases the chances of success. Check out all of the top rated stocks in the consumer financial services industry here.
The CURO share remained unchanged in pre-trading on Thursday. Since the beginning of the year, CURO is up 11.61%, compared to an increase of 18.97% in the reference index S&P 500 over the same period.
About the author: Manisha Chatterjee
Manisha has had a keen interest in the stock market since she was a teenager. She studied economics in college and has a passion for writing which led to her career as a research analyst. More…