LendingTree (NASDAQ:TREE) vs. Better Home & Finance (NASDAQ:BETR) Critical Analysis

LendingTree (NASDAQ:TREE) and Better Home & Finance (NASDAQ:BETR) are both small-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, risk, institutional ownership, dividends, profitability, valuation and analyst recommendations.

Volatility and Risk

LendingTree has a beta of 1.94, indicating that its stock price is 94% more volatile than the S&P 500. Comparatively, Better Home & Finance has a beta of 1.52, indicating that its stock price is 52% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for LendingTree and Better Home & Finance, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
LendingTree	0	2	4	0	2.67
Better Home & Finance	0	0	0	0	N/A

LendingTree currently has a consensus price target of $32.50, indicating a potential upside of 107.80%. Given LendingTree’s higher probable upside, equities research analysts clearly believe LendingTree is more favorable than Better Home & Finance.

Earnings and Valuation

This table compares LendingTree and Better Home & Finance’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
LendingTree	$984.99 million	0.21	-$187.95 million	($12.22)	-1.28
Better Home & Finance	$211.38 million	0.03	$8.74 million	0.07	9.87

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

Profitability

This table compares LendingTree and Better Home & Finance’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
LendingTree	-18.93%	-13.25%	-2.62%
Better Home & Finance	N/A	50.95%	3.25%

Insider and Institutional Ownership

70.2% of LendingTree shares are owned by institutional investors. Comparatively, 0.6% of Better Home & Finance shares are owned by institutional investors. 23.0% of LendingTree shares are owned by insiders. Comparatively, 57.4% of Better Home & Finance shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

Better Home & Finance beats LendingTree on 7 of the 13 factors compared between the two stocks.

About LendingTree

LendingTree, Inc., through its subsidiary, LT Intermediate Company, LLC, operates online consumer platform in the United States. It operates through three segments: Home, Consumer, and Insurance. The Home segment offers purchase mortgage, refinance mortgage, reverse mortgage, and home equity loans; lines of credit; and real estate brokerage services. The Consumer segment provides credit cards; personal, small business, student, and auto loans; deposit accounts; and other credit products, such as credit repair and debt settlement services. The Insurance segment includes information, tools, and access to insurance quote products, including home and automobile, through which consumers are matched with insurance lead aggregators to obtain insurance offers. In addition, the company offers QuoteWizard.com, a marketplace for insurance comparison; ValuePenguin, a personal finance website that offers consumers objective analysis on various financial topics from insurance to credit cards; and Stash, a consumer investing and banking platform that offers a suite of personal investment accounts, traditional and Roth IRAs, custodial investment accounts, and banking services, including checking accounts and debit cards with a Stock-Back rewards program. The company was formerly known as Tree.com, Inc. and changed its name to LendingTree, Inc. in January 2015. LendingTree, Inc. was incorporated in 1996 and is based in Charlotte, North Carolina.

About Better Home & Finance

Better Mortgage Corporation operates as a mortgage banks and brokers company. It was formerly known as Avex Funding Corporation and changed its name to Better Mortgage Corporation in January 2017. The company is based in New York, New York.