Critical Review: Western Union (NYSE:WU) versus Better Home & Finance (NASDAQ:BETR)

Better Home & Finance (NASDAQ:BETR) and Western Union (NYSE:WU) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, institutional ownership, earnings, analyst recommendations, risk, dividends and valuation.

Profitability

This table compares Better Home & Finance and Western Union’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Better Home & Finance	-94.52%	-409.62%	-9.94%
Western Union	9.79%	50.89%	5.87%

Volatility & Risk

Better Home & Finance has a beta of 1.68, meaning that its stock price is 68% more volatile than the S&P 500. Comparatively, Western Union has a beta of 0.5, meaning that its stock price is 50% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and target prices for Better Home & Finance and Western Union, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Better Home & Finance	1	2	7	0	2.60
Western Union	8	6	0	0	1.43

Better Home & Finance presently has a consensus target price of $27.86, suggesting a potential upside of 166.58%. Western Union has a consensus target price of $7.45, suggesting a potential upside of 20.76%. Given Better Home & Finance’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Better Home & Finance is more favorable than Western Union.

Insider & Institutional Ownership

20.9% of Better Home & Finance shares are owned by institutional investors. Comparatively, 91.8% of Western Union shares are owned by institutional investors. 27.7% of Better Home & Finance shares are owned by company insiders. Comparatively, 3.3% of Western Union shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Better Home & Finance and Western Union”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Better Home & Finance	$164.87 million	1.20	-$165.87 million	($11.02)	-0.95
Western Union	$4.05 billion	0.48	$499.60 million	$1.23	5.02

Western Union has higher revenue and earnings than Better Home & Finance. Better Home & Finance is trading at a lower price-to-earnings ratio than Western Union, indicating that it is currently the more affordable of the two stocks.

Summary

Western Union beats Better Home & Finance on 8 of the 14 factors compared between the two stocks.

About Better Home & Finance

Better Home & Finance Holding Co. engages in the provision of comprehensive homeownership services. It offers mortgage loans, real estate agent services, and title and homeowner’s insurance services. The company was founded in 2014 and is headquartered in New York, NY.

About Western Union

The Western Union Company provides money movement and payment services worldwide. The company operates through Consumer Money Transfer and Consumer Services segments. The Consumer Money Transfer segment facilitates money transfers for international cross-border and intra-country transfers, primarily through a network of retail agent locations, as well as through websites and mobile devices. The Consumer Services segments offers bill payment services, which facilitate payments for consumers, businesses, and other organizations, as well as money order services, retail foreign exchange services, prepaid cards, lending partnerships, and digital wallets. The company was founded in 1851 and is headquartered in Denver, Colorado.