Open Lending (NASDAQ:LPRO – Get Free Report) and Encore Capital Group (NASDAQ:ECPG – Get Free Report) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, institutional ownership, analyst recommendations, profitability, earnings, dividends and risk.
Profitability
This table compares Open Lending and Encore Capital Group’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Open Lending | N/A | -48.33% | -17.09% |
| Encore Capital Group | -6.07% | 19.61% | 3.47% |
Risk and Volatility
Open Lending has a beta of 1.94, meaning that its stock price is 94% more volatile than the S&P 500. Comparatively, Encore Capital Group has a beta of 1.48, meaning that its stock price is 48% more volatile than the S&P 500.
Analyst Recommendations
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Open Lending | 1 | 3 | 3 | 0 | 2.29 |
| Encore Capital Group | 1 | 0 | 3 | 1 | 2.80 |
Open Lending currently has a consensus price target of $3.10, indicating a potential upside of 58.97%. Encore Capital Group has a consensus price target of $62.67, indicating a potential upside of 51.52%. Given Open Lending’s higher probable upside, research analysts plainly believe Open Lending is more favorable than Encore Capital Group.
Institutional & Insider Ownership
78.1% of Open Lending shares are owned by institutional investors. 13.2% of Open Lending shares are owned by company insiders. Comparatively, 2.5% of Encore Capital Group shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
Earnings & Valuation
This table compares Open Lending and Encore Capital Group”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Open Lending | $24.02 million | 9.59 | -$135.01 million | ($1.18) | -1.65 |
| Encore Capital Group | $1.47 billion | 0.65 | -$139.24 million | ($3.74) | -11.06 |
Open Lending has higher earnings, but lower revenue than Encore Capital Group. Encore Capital Group is trading at a lower price-to-earnings ratio than Open Lending, indicating that it is currently the more affordable of the two stocks.
Summary
Open Lending beats Encore Capital Group on 9 of the 14 factors compared between the two stocks.
About Open Lending
Open Lending Corporation provides lending enablement and risk analytics solutions to credit unions, regional banks, finance companies, and captive finance companies of automakers in the United States. The company offers Lenders Protection Program (LPP), which is a cloud-based automotive lending platform that provides loan analytics solutions and automated issuance of credit default insurance with third-party insurance providers. Its LPP products include loan analytics, risk-based loan pricing, risk modeling, and automated decision technology for automotive lenders. Open Lending Corporation was founded in 2000 and is based in Austin, Texas.
About Encore Capital Group
Encore Capital Group, Inc., a specialty finance company, provides debt recovery solutions and other related services for consumers across financial assets worldwide. The company purchases portfolios of defaulted consumer receivables at deep discounts to face value, as well as manages them by working with individuals as they repay their obligations and works toward financial recovery. It is also involved in the provision of early stage collection, business process outsourcing, and contingent collection services. In addition, the company engages in debt servicing and other portfolio management services to credit originator for non-performing loans. Further, it offers credit management services. Encore Capital Group, Inc. was incorporated in 1999 and is headquartered in San Diego, California.
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