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

Analyst Ratings

This is a breakdown of recent ratings and target prices for Walker & Dunlop and NowAuto Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Walker & Dunlop 0 0 4 0 3.00
NowAuto Group 0 0 0 0 N/A

Walker & Dunlop currently has a consensus price target of $61.75, suggesting a potential upside of 32.17%. Given Walker & Dunlop’s higher probable upside, research analysts plainly believe Walker & Dunlop is more favorable than NowAuto Group.

Volatility & Risk

Walker & Dunlop has a beta of 1.09, suggesting that its stock price is 9% more volatile than the S&P 500. Comparatively, NowAuto Group has a beta of 2.78, suggesting that its stock price is 178% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Walker & Dunlop 29.89% 18.23% 6.01%
NowAuto Group N/A N/A N/A

Institutional and Insider Ownership

79.0% of Walker & Dunlop shares are owned by institutional investors. 11.2% of Walker & Dunlop shares are owned by insiders. Comparatively, 11.9% of NowAuto Group shares are owned 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.

Dividends

Walker & Dunlop pays an annual dividend of $1.00 per share and has a dividend yield of 2.1%. NowAuto Group does not pay a dividend. Walker & Dunlop pays out 21.0% of its earnings in the form of a dividend.

Earnings & Valuation

This table compares Walker & Dunlop and NowAuto Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Walker & Dunlop $711.86 million 2.05 $211.12 million $4.76 9.82
NowAuto Group N/A N/A N/A N/A N/A

Walker & Dunlop has higher revenue and earnings than NowAuto Group.

Summary

Walker & Dunlop beats NowAuto Group on 8 of the 11 factors compared between the two stocks.

About Walker & Dunlop

Walker & Dunlop, Inc., through its subsidiaries, originates, sells, and services a range of multifamily and other commercial real estate loans for owners and developers of real estate in the United States. The company offers multifamily properties and commercial real estate finance products, such as first mortgage loans, second trust loans, supplemental financings, construction loans, mezzanine loans, and bridge/interim loans. It provides multifamily finance for multifamily, manufactured housing communities, student housing, affordable, and senior housing properties under the Fannie Mae DUS program; and FHA finance, such as construction and permanent loans to developers and owners of multifamily housing, affordable housing, senior housing, and healthcare facilities. The company also acts as an intermediary in the placement of commercial real estate debt between institutional sources of capital, including life insurance companies, investment banks, commercial banks, pension funds, commercial mortgage backed securities (CMBS) issuers, and other institutional investors, as well as owners of various types of commercial real estate. In addition, it advises on capital structure; develops the financing package; facilitates negotiations between its client and institutional sources of capital; coordinates due diligence; and assists in closing the transaction, as well as offers interim loans and CMBS products, and investment sales brokerage services. Further, the company offers underwriting and risk management, servicing and asset management, and direct loan originators and correspondent network services. Walker & Dunlop, Inc. was founded in 1937 and is headquartered in Bethesda, Maryland.

About NowAuto Group

Consumer Automotive Finance Inc. operates as a retailer in the used vehicle market of the United States. It focuses primarily on the buy here/pay here segment of the independent used vehicle sales and finance market. The company sells approximately 2000 and newer model-year used vehicles and provides related financing through sale type leases. As of December 31, 2010, it had two retail locations in Arizona. The company was formerly known as NowAuto Group, Inc. Consumer Automotive Finance Inc. is based in Las Vegas, Nevada.

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