Contrasting Home Capital Group (OTCMKTS:HMCBF) and Guild (NYSE:GHLD)

Home Capital Group (OTCMKTS:HMCBF) and Guild (NYSE:GHLD) are both financial services companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, analyst recommendations, profitability, valuation, dividends, institutional ownership and earnings.

Institutional and Insider Ownership

37.0% of Home Capital Group shares are held by institutional investors. Comparatively, 17.5% of Guild shares are held by institutional investors. 78.0% of Guild shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current recommendations for Home Capital Group and Guild, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Home Capital Group	0	0	0	0	N/A
Guild	1	1	2	0	2.25

Guild has a consensus target price of $15.25, suggesting a potential upside of 12.96%. Given Guild’s higher possible upside, analysts clearly believe Guild is more favorable than Home Capital Group.

Dividends

Home Capital Group pays an annual dividend of $0.64 per share and has a dividend yield of 2.0%. Guild pays an annual dividend of $1.00 per share and has a dividend yield of 7.4%. Home Capital Group pays out 15.7% of its earnings in the form of a dividend. Guild pays out -153.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Guild is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Home Capital Group and Guild’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Home Capital Group	N/A	N/A	N/A
Guild	-5.95%	3.57%	1.27%

Valuation and Earnings

This table compares Home Capital Group and Guild’s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Home Capital Group	N/A	N/A	N/A	$4.06	8.00
Guild	$663.86 million	1.24	-$39.01 million	($0.65)	-20.77

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

Summary

Guild beats Home Capital Group on 8 of the 12 factors compared between the two stocks.

About Home Capital Group

Home Capital Group Inc., through its subsidiary, Home Trust Company, provides residential and non-residential mortgage lending, securitization of residential mortgage products, consumer lending, and credit card services in Canada. The company provides various lending and savings solutions. It offers deposits through brokers and financial planners under the Oaken Financial brand. The company also provides credit card and line of credit services, include Equityline Visa product, a home equity line of credit that is secured by residential property; and cash-secured and unsecured credit card products. In addition, it offers consumer retail lending services for durable household goods, such as water heaters and larger-ticket home improvement items; and consumer loans. Further, the company manages a treasury portfolio. The company was founded in 1986 and is based in Toronto, Canada. As of August 31, 2023, Home Capital Group Inc. operates as a subsidiary of 1000355080 Ontario Inc.

About Guild

Guild Holdings Company originates, sells, and services residential mortgage loans in the United States. It operates in two segments, Origination and Servicing. The company offers residential mortgages through retail and correspondent channels. Guild Holdings Company was incorporated in 1960 and is headquartered in San Diego, California.