LendingTree (NASDAQ: TREE) and LendingClub Corporation (NYSE:LC) are both mid-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, profitabiliy, institutional ownership, valuation, dividends, analyst recommendations and risk.

Profitability

This table compares LendingTree and LendingClub Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
LendingTree 5.85% 17.01% 10.47%
LendingClub Corporation -24.52% -11.99% -2.14%

Analyst Recommendations

This is a breakdown of recent ratings for LendingTree and LendingClub Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
LendingTree 0 0 12 0 3.00
LendingClub Corporation 0 9 7 0 2.44

LendingTree currently has a consensus target price of $188.91, indicating a potential downside of 17.58%. LendingClub Corporation has a consensus target price of $6.75, indicating a potential upside of 11.02%. Given LendingClub Corporation’s higher probable upside, analysts plainly believe LendingClub Corporation is more favorable than LendingTree.

Institutional and Insider Ownership

75.3% of LendingTree shares are owned by institutional investors. Comparatively, 90.9% of LendingClub Corporation shares are owned by institutional investors. 21.9% of LendingTree shares are owned by insiders. Comparatively, 11.4% of LendingClub Corporation shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Risk & Volatility

LendingTree has a beta of 1.58, suggesting that its share price is 58% more volatile than the S&P 500. Comparatively, LendingClub Corporation has a beta of 1.86, suggesting that its share price is 86% more volatile than the S&P 500.

Earnings & Valuation

This table compares LendingTree and LendingClub Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
LendingTree $480.69 million 5.72 $73.26 million $2.14 107.10
LendingClub Corporation $474.25 million 5.18 -$121.16 million ($0.30) -20.27

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

Summary

LendingTree beats LendingClub Corporation on 10 of the 13 factors compared between the two stocks.

About LendingTree

LendingTree, Inc. (LendingTree) is engaged in operating an online loan marketplace for consumers seeking loans and other credit-based offerings. The Company’s online marketplace provides consumers with access to product offerings from various lenders, which it refers to as Network Lenders, including mortgage loans, home equity loans and lines of credit, reverse mortgage loans, auto loans, credit cards, personal loans, student loans, small business loans and other related offerings. In addition, the Company offers tools and resources, including free credit scores that facilitate comparison shopping for these loans and other credit-based offerings. The Company offers its products in categories, including mortgage products and non-mortgage products. Its mortgage products category includes its purchase and refinance products. Its non-mortgage products include lending products and other products.

About LendingClub Corporation

LendingClub Corporation provides online marketplace to connect borrowers and investors. Consumers and small business owners borrow through Lending Club. Investors use Lending Club to earn risk-adjusted returns from an asset class that has been closed to many investors and only available on a limited basis to large institutional investors. Its technology automates aspects of operations, including the borrower application process, data gathering, credit decisioning and scoring, loan funding, investing and servicing, regulatory compliance and fraud detection. Its platform offers analytical tools and data to enable investors to make decisions and assess their portfolios. Its technology platform has allowed it to expand its offerings from personal loans to include small business loans, and to expand investor classes from individuals to institutions and create various investment vehicles.

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