Financial Survey: loanDepot (NYSE:LDI) versus MGIC Investment (NYSE:MTG)

loanDepot (NYSE:LDI) and MGIC Investment (NYSE:MTG) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, valuation, risk, profitability, earnings and analyst recommendations.

Profitability

This table compares loanDepot and MGIC Investment’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
loanDepot	-5.52%	-28.25%	-1.56%
MGIC Investment	59.20%	13.90%	10.81%

Earnings & Valuation

This table compares loanDepot and MGIC Investment”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
loanDepot	$956.18 million	0.26	-$62.65 million	($0.30)	-2.42
MGIC Investment	$1.21 billion	5.02	$738.35 million	$3.20	9.28

MGIC Investment has higher revenue and earnings than loanDepot. loanDepot is trading at a lower price-to-earnings ratio than MGIC Investment, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings for loanDepot and MGIC Investment, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
loanDepot	3	2	0	0	1.40
MGIC Investment	0	4	1	2	2.71

loanDepot currently has a consensus target price of $1.92, indicating a potential upside of 164.37%. MGIC Investment has a consensus target price of $30.60, indicating a potential upside of 3.09%. Given loanDepot’s higher probable upside, analysts plainly believe loanDepot is more favorable than MGIC Investment.

Volatility & Risk

loanDepot has a beta of 3.4, suggesting that its share price is 240% more volatile than the S&P 500. Comparatively, MGIC Investment has a beta of 0.65, suggesting that its share price is 35% less volatile than the S&P 500.

Dividends

loanDepot pays an annual dividend of $4.80 per share and has a dividend yield of 662.1%. MGIC Investment pays an annual dividend of $0.68 per share and has a dividend yield of 2.3%. loanDepot pays out -1,600.0% of its earnings in the form of a dividend. MGIC Investment pays out 21.2% 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. MGIC Investment has increased its dividend for 6 consecutive years. loanDepot is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

39.4% of loanDepot shares are held by institutional investors. Comparatively, 95.6% of MGIC Investment shares are held by institutional investors. 65.9% of loanDepot shares are held by insiders. Comparatively, 1.3% of MGIC Investment shares are held by 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.

Summary

MGIC Investment beats loanDepot on 13 of the 18 factors compared between the two stocks.

About loanDepot

loanDepot, Inc. engages in originating, financing, selling, and servicing residential mortgage loans in the United States. The company offers conventional agency-conforming and prime jumbo, federal assistance residential mortgage, and home equity loans. It also provides settlement services, which include captive title and escrow business; real estate services that cover captive real estate referral business; and insurance services, including services to homeowners, as well as other consumer insurance policies. The company was founded in 2010 and is headquartered in Irvine, California.

About MGIC Investment

MGIC Investment Corporation, through its subsidiaries, provides private mortgage insurance, other mortgage credit risk management solutions, and ancillary services to lenders and government sponsored entities in the United States, the District of Columbia, Puerto Rico, and Guam. The company offers primary mortgage insurance that provides mortgage default protection on individual loans, as well as covers unpaid loan principal, delinquent interest, and various expenses associated with the default and subsequent foreclosure. It also provides pool insurance for secondary market mortgage transactions; and contract underwriting services, as well as reinsurance. The company serves originators of residential mortgage loans, including savings institutions, commercial banks, mortgage brokers, credit unions, mortgage bankers, and other lenders. MGIC Investment Corporation was founded in 1957 and is headquartered in Milwaukee, Wisconsin.