LoanDepot, Inc. (L DI), on Foothill Ranch, California, is a technology-enabled, customer-centric residential mortgage platform. Additionally, their technology platform, mello, works across all aspects of their business, including lead generation, origination, and data integration. By comparison, diversified consumer finance company CURO Group Holdings Corp. (CURE) offers unsecured installment loans, secured installment loans, indefinite loans, and lump sum loans. CURO is based on Wichita, Kans.
Despite interest rates having hovered near zero for an extended period, the financial sector rebounded significantly earlier this year as the economy gradually recovered thanks to strong progress on the COVID vaccination front. -19. In addition, following yesterday’s announcement from the Federal Reserve, half of the policy makers of the United States Federal Reserve now hope to start raising interest rates next year, which should bode well for the financial sector. So LDI and CURO could benefit.
LDI has dropped 12.9% in price over the last month, while CURO has lost 1%. Furthermore, in terms of performance over the past six months, CURO is the clear winner with 9.5% gains against LDI’s negative returns.
But which of these two stocks is better to buy now? Let’s find out.
Several law firms have launched LDI investigations regarding alleged violations of federal securities laws. For example, it is alleged that the company made false and misleading statements to the market. Additionally, its refinance originations were in decline at the time of the IPO due to competition, among other factors.
On June 9, CURO announced several benefits from the completion of the business combination between Katapult Holding, Inc. and FinServ Acquisition Corp. CURO CEO Don Gayhardt said: âWe believe that our investment in Katapult will allow CURO and its shareholders continue to participate in the fast-growing US e-commerce point-of-sale finance space. “
Recent financial results
LDI’s adjusted total revenue decreased 28.5% year-over-year to $ 825.33 million for the second quarter, which ended June 30, 2021. The company’s adjusted net income decreased 88.3% year-over-year to $ 57 , 50 million, while its adjusted EPS decreased by 81.8%. sequentially to $ 0.18. In addition, its adjusted EBITDA was $ 109.26 million, compared to $ 682.59 million in the same period of the previous year.
For the second quarter ended June 30, 2021, CURO’s net income increased 8.1% year-over-year to $ 142.53 million. However, while his adjusted net income decreased 21.5% year-over-year to $ 17.39 million, his adjusted EPS decreased 24.5% year-over-year to $ 0.40. Additionally, its Adjusted EBITDA decreased 1.6% year-over-year to $ 50.30 million.
Expected financial performance
LDI’s revenue is expected to decline 46.6% for the quarter ending December 31, 2021 and 10% in its fiscal year 2022. Additionally, its EPS is expected to decline 1.1% next year. . In addition, your EPS is expected to decrease at a rate of 14.7% per year over the next five years.
By comparison, analysts expect CURO’s revenue to increase 14.4% for the quarter ending December 31, 2021 and 28.7% in its fiscal year 2022. Additionally, the company’s EPS is expected to increase 63.3% in fiscal 2022. Additionally, your EPS is expected to grow at a rate of 3.6% annually over the next five years.
LDI’s $ 4.94 billion revenue in the past 12 months compares to CURO’s $ 768.33 million. In addition, LDI is more profitable, with a gross profit and a net profit margin of 94.48% and 41.85%, respectively, compared to 73.7% and 19.21% for CURO.
In terms of P / S from 12 months ago, CURO is currently trading at 0.84x, which is higher than LDI’s 0.18x. In addition, the 2.46x railing from CURO-12 months P / B The ratio is 40.6% higher than the 1.75x of LDI.
Although CURO seems much more expensive than LDI, we believe this premium is worth paying considering CURO’s significantly higher revenue and earnings growth potential.
LDI has an overall rating of C, which equates to Neutral on our property POWR Ratings system. In comparison, CURO has an overall B rating, which translates to a Buy. POWR ratings are calculated considering 118 different factors, with each factor weighted to an optimum degree.
LDI has a C grade for quality, which is in sync with the last 12-month CAPEX / Sales of 1.09%, which is lower than the industry average of 1.73%. On the other hand, CURO has a B grade in Quality, which is consistent with its CAPEX / S of 1.74% in the last 12 months, which is higher than the industry average of 1.73%.
LDI is rated C for Momentum, which is in tune with its 65.6% loss in the past six months, while CURO’s 9.5% gains in the past six months helped it earn a B rating for Momentum.
Additionally, LDI has a C rating for Sentiment, consistent with unfavorable sentiment from analysts. CURO has a B grade for Sentiment.
Of the 51 shares in the Consumer financial services industry, LDI is ranked number 27, while CURO is ranked number 4.
In addition to the POWR ratings I just highlighted, we have also rated the stocks on Value, Growth and Stability. Click here to see all LDI ratings. Plus, get all CURO qualifications here.
Because interest rates could rise earlier than expected, the financial sector is expected to benefit significantly. Therefore, while both LDI and CURO are expected to eventually turn a profit, we believe it would be prudent to acquire CURO shares now due to their better finances and significantly higher EPS and revenue growth estimates.
Our research shows that the odds of success increase when you invest in stocks with an overall rating of Buy or Strong Buy. See all the top-rated stocks in the Consumer Financial Services industry here.
CURO shares were unchanged in pre-market trading on Thursday. So far this year, CURO has gained 11.61%, compared to an 18.97% increase in the benchmark S&P 500 over the same period.
Author Bio: Manisha Chatterjee
Since she was young, Manisha has had a keen interest in the stock market. He majored in economics in college. and has a passion for writing, which has led to her career as a research analyst. Plus…
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