NewStar Financial (NASDAQ: NEWS) and INTL Fcstone (NASDAQ:INTL) are both small-cap financials companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, dividends, profitability, institutional ownership, risk and valuation.
Risk & Volatility
NewStar Financial has a beta of 2.09, suggesting that its share price is 109% more volatile than the S&P 500. Comparatively, INTL Fcstone has a beta of 1.7, suggesting that its share price is 70% more volatile than the S&P 500.
This table compares NewStar Financial and INTL Fcstone’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|NewStar Financial||$304.98 million||1.63||$28.22 million||$0.10||119.80|
|INTL Fcstone||$29.42 billion||0.03||$6.40 million||$0.31||130.61|
NewStar Financial has higher earnings, but lower revenue than INTL Fcstone. NewStar Financial is trading at a lower price-to-earnings ratio than INTL Fcstone, indicating that it is currently the more affordable of the two stocks.
This table compares NewStar Financial and INTL Fcstone’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Insider and Institutional Ownership
73.4% of NewStar Financial shares are owned by institutional investors. Comparatively, 64.8% of INTL Fcstone shares are owned by institutional investors. 8.1% of NewStar Financial shares are owned by insiders. Comparatively, 20.5% of INTL Fcstone shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
This is a breakdown of current ratings and recommmendations for NewStar Financial and INTL Fcstone, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
NewStar Financial presently has a consensus target price of $11.00, indicating a potential downside of 8.18%. Given NewStar Financial’s higher possible upside, equities research analysts clearly believe NewStar Financial is more favorable than INTL Fcstone.
NewStar Financial pays an annual dividend of $0.08 per share and has a dividend yield of 0.7%. INTL Fcstone does not pay a dividend. NewStar Financial pays out 80.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
NewStar Financial beats INTL Fcstone on 9 of the 14 factors compared between the two stocks.
NewStar Financial Company Profile
NewStar Financial, Inc. (NewStar) is a commercial finance company. The Company operates through two segments: Commercial Lending and Asset Management. The Commercial Lending segment represents its direct lending activities, which are focused on providing a range of flexible senior secured debt options to mid-sized companies. The Asset Management segment represents its investment advisory activities, which are focused on providing opportunities for qualified investors to invest in a range of credit funds managed by the Company. The Company’s direct lending activities are focused on meeting the financial needs of companies and private investors in the middle market by offering a range of debt financing options. Through its asset management platforms, NewStar offers a range of investment products employing credit-oriented strategies focused on middle market loans and liquid, tradeable credit.
INTL Fcstone Company Profile
INTL Fcstone Inc. is a financial services company. The Company provides financial products, and advisory and execution service. The Company operates through five segments: Commercial Hedging, Global Payments, Securities, Physical Commodities, and Clearing and Execution Services (CES). The Commercial Hedging segment serves its commercial clients through its team of risk management consultants. The Global Payments segment provides global payment solutions to banks and commercial businesses, as well as charities and non-governmental organizations and government organizations. The Securities segment provides solutions that facilitate cross-border trading. The Physical Commodities segment consists of its physical precious metals trading and physical agricultural and energy commodity businesses. The CES segment seeks to provide clearing and execution of exchange-traded futures and options for the institutional and trader market segments.
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