Analyzing Medallion Financial (NASDAQ:MFIN) and Regional Management (NYSE:RM)

Medallion Financial (NASDAQ:MFIN) and Regional Management (NYSE:RM) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their earnings, risk, valuation, profitability, analyst recommendations, institutional ownership and dividends.

Institutional and Insider Ownership

40.6% of Medallion Financial shares are held by institutional investors. Comparatively, 98.9% of Regional Management shares are held by institutional investors. 24.6% of Medallion Financial shares are held by company insiders. Comparatively, 10.9% of Regional Management shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Medallion Financial and Regional Management”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Medallion Financial	$353.31 million	0.76	$43.04 million	$1.33	8.77
Regional Management	$645.60 million	0.50	$44.41 million	$4.75	7.36

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

Profitability

This table compares Medallion Financial and Regional Management’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Medallion Financial	9.25%	7.11%	1.20%
Regional Management	6.98%	12.49%	2.25%

Risk and Volatility

Medallion Financial has a beta of 0.78, suggesting that its stock price is 22% less volatile than the S&P 500. Comparatively, Regional Management has a beta of 1.02, suggesting that its stock price is 2% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Medallion Financial and Regional Management, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Medallion Financial	0	4	0	0	2.00
Regional Management	0	2	2	0	2.50

Medallion Financial presently has a consensus target price of $10.50, suggesting a potential downside of 10.03%. Regional Management has a consensus target price of $43.00, suggesting a potential upside of 22.97%. Given Regional Management’s stronger consensus rating and higher possible upside, analysts plainly believe Regional Management is more favorable than Medallion Financial.

Dividends

Medallion Financial pays an annual dividend of $0.56 per share and has a dividend yield of 4.8%. Regional Management pays an annual dividend of $1.20 per share and has a dividend yield of 3.4%. Medallion Financial pays out 42.1% of its earnings in the form of a dividend. Regional Management pays out 25.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Summary

Regional Management beats Medallion Financial on 11 of the 16 factors compared between the two stocks.

About Medallion Financial

Medallion Financial Corp., together with its subsidiaries, operates as a specialty finance company in the United States. It operates in four segments: Recreation Lending, Home Improvement Lending, Commercial Lending, and Taxi Medallion Lending. The company offers loans that finance consumer purchases of recreational vehicles, boats, and other consumer recreational equipment; consumer financing for window, siding, and roof replacement, swimming pool installations, and other home improvement projects; senior and subordinated loans for the purchase of equipment and related assets necessary to open a new business, or purchase or improvement of an existing business; and taxi medallion loans to individuals and small to mid-size businesses. It also provides debt, mezzanine, and equity investment capital to companies in various commercial industries; and raises deposits and conducts other banking activities. Medallion Financial Corp. was incorporated in 1995 and is headquartered in New York City, New York.

About Regional Management

Regional Management Corp., a diversified consumer finance company, provides various installment loan products primarily to customers with limited access to consumer credit from banks, thrifts, credit card companies, and other lenders in the United States. It offers small and large installment loans; and retail loans to finance the purchase of furniture, appliances, and other retail products. The company also provides insurance products, including credit life, credit accident and health, credit property, vehicle single interest, and credit involuntary unemployment insurance; collateral protection insurance; and property insurance, as well as reinsurance products. In addition, its loans are sourced through branches, centrally-managed direct mail campaigns, and digital partners, as well as its consumer website. The company was incorporated in 1987 and is headquartered in Greer, South Carolina.