Comparing Freddie Mac (OTCMKTS:FMCC) and loanDepot (NYSE:LDI)

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

Analyst Recommendations

This is a breakdown of current recommendations and price targets for loanDepot and Freddie Mac, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
loanDepot	1	1	0	0	1.50
Freddie Mac	1	0	0	0	1.00

loanDepot currently has a consensus price target of $1.98, suggesting a potential upside of 53.70%. Freddie Mac has a consensus price target of $4.50, suggesting a potential downside of 46.24%. Given loanDepot’s stronger consensus rating and higher possible upside, research analysts plainly believe loanDepot is more favorable than Freddie Mac.

Volatility & Risk

loanDepot has a beta of 3.39, indicating that its share price is 239% more volatile than the S&P 500. Comparatively, Freddie Mac has a beta of 2.02, indicating that its share price is 102% more volatile than the S&P 500.

Earnings & Valuation

This table compares loanDepot and Freddie Mac”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
loanDepot	$1.06 billion	0.40	-$98.33 million	($0.45)	-2.86
Freddie Mac	$122.05 billion	0.04	$11.86 billion	($0.02)	-418.50

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

Institutional and Insider Ownership

39.4% of loanDepot shares are owned by institutional investors. 78.1% of loanDepot shares are owned by company insiders. Comparatively, 0.1% of Freddie Mac shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares loanDepot and Freddie Mac’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
loanDepot	-7.74%	-18.41%	-1.57%
Freddie Mac	9.53%	-41.19%	0.35%

Summary

loanDepot beats Freddie Mac on 8 of the 13 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 Freddie Mac

Federal Home Loan Mortgage Corporation operates in the secondary mortgage market in the United States. It operates through two segments, Single-Family and Multifamily. The Single-Family segment purchases, securitizes, and guarantees single-family loans; and manages single-family mortgage credit and market risk, as well as manages mortgage-related investments portfolio, single-family securitization activities, and treasury functions. This segment serves mortgage banking companies, commercial banks, regional banks, community banks, credit unions, housing finance agencies, savings institutions, and non-depository financial institutions. The Multifamily segment engages in the purchase, securitization, and guarantee of multifamily loans; issuance of multifamily K certificates; manages multifamily mortgage credit and market risk; and invests in multifamily loans and mortgage-related securities. It serves banks and other financial institutions, insurance companies, money managers, hedge funds, pension funds, state and local governments, and broker dealers. Federal Home Loan Mortgage Corporation incorporated in 1970 and is headquartered in McLean, Virginia.