Critical Contrast: loanDepot (NYSE:LDI) & Rocket Companies (NYSE:RKT)

loanDepot (NYSE:LDI) and Rocket Companies (NYSE:RKT) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, dividends, risk, earnings, analyst recommendations, valuation and profitability.

Institutional and Insider Ownership

39.4% of loanDepot shares are owned by institutional investors. Comparatively, 4.6% of Rocket Companies shares are owned by institutional investors. 78.1% of loanDepot shares are owned by company insiders. Comparatively, 92.6% of Rocket Companies shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent recommendations for loanDepot and Rocket Companies, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
loanDepot	1	2	0	0	1.67
Rocket Companies	2	9	1	1	2.08

loanDepot currently has a consensus target price of $2.30, indicating a potential upside of 9.26%. Rocket Companies has a consensus target price of $15.81, indicating a potential downside of 12.65%. Given loanDepot’s higher possible upside, equities analysts clearly believe loanDepot is more favorable than Rocket Companies.

Risk and Volatility

loanDepot has a beta of 3.35, indicating that its share price is 235% more volatile than the S&P 500. Comparatively, Rocket Companies has a beta of 2.28, indicating that its share price is 128% more volatile than the S&P 500.

Earnings & Valuation

This table compares loanDepot and Rocket Companies”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
loanDepot	$1.06 billion	0.66	-$98.33 million	($0.33)	-6.38
Rocket Companies	$5.10 billion	7.47	$29.37 million	($0.05)	-361.92

Rocket Companies has higher revenue and earnings than loanDepot. Rocket Companies is trading at a lower price-to-earnings ratio than loanDepot, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares loanDepot and Rocket Companies’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
loanDepot	-5.95%	-19.41%	-1.53%
Rocket Companies	-0.01%	3.18%	1.01%

Summary

Rocket Companies beats loanDepot on 11 of the 15 factors compared between the two stocks.

About loanDepot

loanDepot, Inc. engages in originating, financing, selling, and servicing residential mortgage loans in the United States. The company offers conventional agency-conforming and prime jumbo, federal assistance residential mortgage, and home equity loans. It also provides settlement services, which include captive title and escrow business; real estate services that cover captive real estate referral business; and insurance services, including services to homeowners, as well as other consumer insurance policies. The company was founded in 2010 and is headquartered in Irvine, California.

About Rocket Companies

Rocket Companies, Inc., a fintech holding company, provides mortgage lending, title and settlement services, and other financial technology services in the United States and Canada. It operates through two segments, Direct to Consumer and Partner Network. The company’s solutions include Rocket Mortgage, a mortgage lender; Amrock that provides title insurance, property valuation, and settlement services; Rocket Homes, a home search platform and real estate agent referral network, which offers technology-enabled services to support the home buying and selling experience; and Rocket Loans, an online-based personal loans business. It also offers Core Digital Media, a online marketing platform in the mortgage and personal financial product sectors; Rocket Money, a personal finance app that helps clients manage every aspect of their financial lives; Lendesk, a software services company that provides a point of sale system for mortgage professionals and a loan origination system for private lenders; Rock Connections, a sales and support platform specializing in contact center services; and Rocket Innovation Studio that recruits and mentors top technology talent. In addition, the company originates, closes, sells, and services agency-conforming loans. Rocket Companies, Inc. was founded in 1985 and is headquartered in Detroit, Michigan. The company operates as a subsidiary of Rock Holdings Inc.