Acacia Research (NASDAQ:ACTG) & Walker & Dunlop (NYSE:WD) Critical Review

Walker & Dunlop (NYSE:WD) and Acacia Research (NASDAQ:ACTG) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, dividends, valuation, profitability, institutional ownership, earnings and analyst recommendations.

Insider and Institutional Ownership

81.0% of Walker & Dunlop shares are owned by institutional investors. Comparatively, 86.7% of Acacia Research shares are owned by institutional investors. 4.0% of Walker & Dunlop shares are owned by company insiders. Comparatively, 1.7% of Acacia Research shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings and target prices for Walker & Dunlop and Acacia Research, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Walker & Dunlop	1	0	5	0	2.67
Acacia Research	1	0	1	0	2.00

Walker & Dunlop currently has a consensus price target of $64.00, suggesting a potential upside of 53.22%. Acacia Research has a consensus price target of $6.00, suggesting a potential upside of 33.04%. Given Walker & Dunlop’s stronger consensus rating and higher possible upside, equities analysts clearly believe Walker & Dunlop is more favorable than Acacia Research.

Valuation and Earnings

This table compares Walker & Dunlop and Acacia Research”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Walker & Dunlop	$1.23 billion	1.16	$57.08 million	$1.12	37.29
Acacia Research	$285.23 million	1.54	$21.68 million	($0.15)	-30.07

Walker & Dunlop has higher revenue and earnings than Acacia Research. Acacia Research is trading at a lower price-to-earnings ratio than Walker & Dunlop, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Walker & Dunlop has a beta of 1.45, indicating that its stock price is 45% more volatile than the S&P 500. Comparatively, Acacia Research has a beta of 0.44, indicating that its stock price is 56% less volatile than the S&P 500.

Profitability

This table compares Walker & Dunlop and Acacia Research’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Walker & Dunlop	2.94%	7.25%	2.31%
Acacia Research	-5.39%	0.44%	0.33%

Summary

Walker & Dunlop beats Acacia Research on 12 of the 14 factors compared between the two stocks.

About Walker & Dunlop

Walker & Dunlop, Inc. is a holding company, which engages in the provision of commercial real estate and finance services. It operates through the following segments: Capital Markets, Servicing and Asset Management, and Corporate. The Capital Markets segment offers a comprehensive range of commercial real estate finance products to customers. The Servicing and Asset Management segment includes servicing and asset-managing and managing third-party capital investments. The Corporate segment consists primarily of the company’s treasury operations and other corporate-level activities. The company was founded by Oliver Walker and Laird Dunlop in 1937 and is headquartered in Bethesda, MD.

About Acacia Research

Acacia is a publicly traded (Nasdaq: ACTG) company that is focused on acquiring and operating businesses across the industrial, energy and technology sectors where it believes it can leverage its expertise, significant capital base, and deep industry relationships to drive value. Acacia evaluates opportunities based on the attractiveness of the underlying cash flows, without regard to a specific investment horizon. Acacia operates its businesses based on three key principles of people, process, and performance and has built a management team with demonstrated expertise in research, transactions and execution, and operations and management.