Financial Analysis: OneMain Holdings (OMF) and LendingClub Corporation (NYSE:LC)

LendingClub Corporation (NYSE: LC) and OneMain Holdings (NYSE:OMF) are both mid-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their risk, valuation, analyst recommendations, dividends, earnings, institutional ownership and profitability.

Analyst Ratings

This is a breakdown of recent recommendations for LendingClub Corporation and OneMain Holdings, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
LendingClub Corporation 0 9 7 0 2.44
OneMain Holdings 0 9 7 0 2.44

LendingClub Corporation presently has a consensus target price of $6.82, indicating a potential upside of 14.37%. OneMain Holdings has a consensus target price of $29.06, indicating a potential upside of 11.44%. Given LendingClub Corporation’s higher possible upside, equities analysts plainly believe LendingClub Corporation is more favorable than OneMain Holdings.

Volatility & Risk

LendingClub Corporation has a beta of 1.86, suggesting that its stock price is 86% more volatile than the S&P 500. Comparatively, OneMain Holdings has a beta of 2.85, suggesting that its stock price is 185% more volatile than the S&P 500.

Institutional & Insider Ownership

91.7% of LendingClub Corporation shares are owned by institutional investors. Comparatively, 95.5% of OneMain Holdings shares are owned by institutional investors. 11.4% of LendingClub Corporation shares are owned by company insiders. Comparatively, 57.7% of OneMain Holdings shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares LendingClub Corporation and OneMain Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
LendingClub Corporation -24.52% -11.97% -2.18%
OneMain Holdings 3.63% 14.31% 2.42%

Valuation and Earnings

This table compares LendingClub Corporation and OneMain Holdings’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
LendingClub Corporation $511.51 million 4.79 -$123.42 million ($0.30) -19.87
OneMain Holdings $1.84 billion 1.92 $127.18 million $0.94 27.74

OneMain Holdings has higher revenue and earnings than LendingClub Corporation. LendingClub Corporation is trading at a lower price-to-earnings ratio than OneMain Holdings, indicating that it is currently the more affordable of the two stocks.

Summary

OneMain Holdings beats LendingClub Corporation on 9 of the 11 factors compared between the two stocks.

LendingClub Corporation Company Profile

LendingClub Corporation provides online marketplace to connect borrowers and investors. Consumers and small business owners borrow through Lending Club. Investors use Lending Club to earn risk-adjusted returns from an asset class that has been closed to many investors and only available on a limited basis to large institutional investors. Its technology automates aspects of operations, including the borrower application process, data gathering, credit decisioning and scoring, loan funding, investing and servicing, regulatory compliance and fraud detection. Its platform offers analytical tools and data to enable investors to make decisions and assess their portfolios. Its technology platform has allowed it to expand its offerings from personal loans to include small business loans, and to expand investor classes from individuals to institutions and create various investment vehicles.

OneMain Holdings Company Profile

OneMain Holdings, Inc. is a financial services holding company. The Company is a consumer finance company, which is engaged in providing personal loan products; credit and non-credit insurance, and service loans owned by it and service or subservice loans owned by third-parties. The Company’s segments include Consumer and Insurance; Acquisitions and Servicing; Real Estate, and Other. It is engaged in pursuing strategic acquisitions and dispositions of assets and businesses, including loan portfolios or other financial assets. The Company originates and services personal loans (secured and unsecured) through two business divisions: branch operations and centralized operations. As of December 31, 2016, its combined branch operations included over 1,800 branch offices in 44 states. It offers optional credit insurance products to its customers, including credit life insurance, credit disability insurance, credit involuntary unemployment insurance and collateral protection insurance.

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