Financial Comparison: Rocket Companies (NYSE:RKT) versus Burford Capital (NYSE:BUR)

Rocket Companies (NYSE:RKT) and Burford Capital (NYSE:BUR) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, risk, dividends, valuation and earnings.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Rocket Companies and Burford Capital, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rocket Companies	0	7	8	0	2.53
Burford Capital	1	3	2	0	2.17

Rocket Companies currently has a consensus target price of $18.75, indicating a potential upside of 24.38%. Burford Capital has a consensus target price of $8.88, indicating a potential upside of 145.74%. Given Burford Capital’s higher probable upside, analysts plainly believe Burford Capital is more favorable than Rocket Companies.

Dividends

Rocket Companies pays an annual dividend of $1.28 per share and has a dividend yield of 8.5%. Burford Capital pays an annual dividend of $0.12 per share and has a dividend yield of 3.3%. Rocket Companies pays out 284.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Burford Capital pays out -1.6% of its earnings in the form of a dividend.

Institutional and Insider Ownership

4.6% of Rocket Companies shares are owned by institutional investors. 57.7% of Rocket Companies shares are owned by insiders. Comparatively, 8.9% of Burford Capital shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Rocket Companies and Burford Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Rocket Companies	11.14%	5.33%	2.08%
Burford Capital	N/A	14.73%	5.79%

Volatility and Risk

Rocket Companies has a beta of 2.27, indicating that its stock price is 127% more volatile than the S&P 500. Comparatively, Burford Capital has a beta of 1.29, indicating that its stock price is 29% more volatile than the S&P 500.

Earnings & Valuation

This table compares Rocket Companies and Burford Capital”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Rocket Companies	$10.44 billion	4.09	-$68.00 million	$0.45	33.50
Burford Capital	-$1.63 billion	-0.49	$62.57 million	($7.52)	-0.48

Burford Capital has lower revenue, but higher earnings than Rocket Companies. Burford Capital is trading at a lower price-to-earnings ratio than Rocket Companies, indicating that it is currently the more affordable of the two stocks.

Summary

Rocket Companies beats Burford Capital on 11 of the 16 factors compared between the two stocks.

About Rocket Companies

Rocket Companies, Inc., a fintech holding company, provides mortgage lending, title and settlement services, and other financial technology services in the United States and Canada. It operates through two segments, Direct to Consumer and Partner Network. The company’s solutions include Rocket Mortgage, a mortgage lender; Amrock that provides title insurance, property valuation, and settlement services; Rocket Homes, a home search platform and real estate agent referral network, which offers technology-enabled services to support the home buying and selling experience; and Rocket Loans, an online-based personal loans business. It also offers Core Digital Media, a online marketing platform in the mortgage and personal financial product sectors; Rocket Money, a personal finance app that helps clients manage every aspect of their financial lives; Lendesk, a software services company that provides a point of sale system for mortgage professionals and a loan origination system for private lenders; Rock Connections, a sales and support platform specializing in contact center services; and Rocket Innovation Studio that recruits and mentors top technology talent. In addition, the company originates, closes, sells, and services agency-conforming loans. Rocket Companies, Inc. was founded in 1985 and is headquartered in Detroit, Michigan. The company operates as a subsidiary of Rock Holdings Inc.

About Burford Capital

Burford Capital Limited provides legal finance products and services worldwide. The company operates through two segments, Capital Provision, and Asset Management and Other Provision. The Capital Provision segment provides capital to the legal industry or in connection with legal matters directly and through investment in private funds; legal risk management services; lower risk legal finance business focusing on pre-settlement litigation matters with lower risk and lower expected returns; post-settlement finance; and complex strategies in which it acts as a principal and acquires assets that are mispriced. The Asset Management and Other Services segment provides services to the legal industry, including litigation insurance. Burford Capital Limited was incorporated in 2009 and is based in Saint Peter Port, Guernsey.