Ditech (NYSE:DHCP) and Nationstar Mortgage (NYSE:NSM) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, valuation, institutional ownership, risk, profitability, analyst recommendations and dividends.
This table compares Ditech and Nationstar Mortgage’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
39.0% of Ditech shares are held by institutional investors. Comparatively, 97.0% of Nationstar Mortgage shares are held by institutional investors. 32.0% of Ditech shares are held by insiders. Comparatively, 1.1% of Nationstar Mortgage shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
This is a summary of current ratings and target prices for Ditech and Nationstar Mortgage, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Nationstar Mortgage has a consensus target price of $17.00, suggesting a potential downside of 6.95%. Given Nationstar Mortgage’s higher possible upside, analysts clearly believe Nationstar Mortgage is more favorable than Ditech.
Earnings and Valuation
This table compares Ditech and Nationstar Mortgage’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Ditech||$831.26 million||0.01||-$426.89 million||N/A||N/A|
|Nationstar Mortgage||$1.65 billion||1.09||$30.00 million||$1.48||12.34|
Nationstar Mortgage has higher revenue and earnings than Ditech.
Nationstar Mortgage beats Ditech on 9 of the 10 factors compared between the two stocks.
Ditech Holding Corporation operates as an independent servicer and originator of mortgage loans, and servicer of reverse mortgage loans. The company operates through three segments: Servicing, Originations, and Reverse Mortgage. The Servicing segment performs servicing for mortgage loan portfolio, on behalf of third-party credit owners of mortgage loans, as well as performs subservicing for third-party owners. This segment also operates complementary businesses, including asset receivables management that performs collections of post charge-off deficiency balances for third parties; and holds the assets and mortgage-backed debt of the Residual Trusts. The Originations segment originates and purchases mortgage loans through consumer originations, and correspondents and wholesale lendings. The Reverse Mortgage segment primarily focuses on the servicing of its own reverse loans and subservicing on behalf of third-party credit owners of reverse loans. This segment also provides complementary services for the reverse mortgage market, such as real estate owned property management and disposition. It serves government-sponsored entities, government agencies, third-party securitization trusts, and other credit owners. The company was formerly known as Walter Investment Management Corp. and changed its name to Ditech Holding Corporation in February 2018. Ditech Holding Corporation was founded in 1958 and is based in Fort Washington, Pennsylvania.
About Nationstar Mortgage
Nationstar Mortgage Holdings Inc. provides servicing, origination, and transaction based services primarily to single-family residences in the United States. It operates in three segments: Servicing, Originations, and Xome. The Servicing segment offers conventional residential mortgage loans and home equity conversion loans. It engages in the collection and recording of mortgage payments, administration of mortgage escrow accounts, negotiations of workouts and modifications, and conducting or managing the foreclosure on behalf of investors or other servicers for owned mortgage servicing rights. This segment also provides various services that include collecting monthly payments, maintaining escrow accounts, providing periodic reports, and managing insurance. The Originations segment operates an integrated residential loan origination platform that is primarily focused on customer retention. This segment originates and purchases conventional mortgage loans and government-insured mortgage loans. Its platform also serves as a loss mitigation solution for servicing clients and customers by offering refinancing options to borrowers. The Xome segment provides technology and data-enhanced solutions to home buyers, home sellers, real estate professionals, and companies. It offers Xome Exchange, a technology-enabled platform that manages and sells residential properties; Xome Services, which connects the touch points of the real estate transactions process by providing title, escrow, and collateral valuation services for purchase, refinance, and default transactions; and a software as a service platform that provides integrated technology, media, and data solutions to real estate franchisors, brokerages, agents, and multiple listing service organizations and associations. The company was founded in 1994 and is headquartered in Coppell, Texas.
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