Paypal (NASDAQ:PYPL) and NEWTEK Business Services (NASDAQ:NEWT) are both computer and technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their dividends, earnings, valuation, risk, profitability, institutional ownership and analyst recommendations.
Earnings & Valuation
This table compares Paypal and NEWTEK Business Services’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Paypal||$15.45 billion||8.35||$2.06 billion||$1.79||61.37|
|NEWTEK Business Services||$49.51 million||8.43||$35.68 million||$1.94||11.25|
Paypal has higher revenue and earnings than NEWTEK Business Services. NEWTEK Business Services is trading at a lower price-to-earnings ratio than Paypal, indicating that it is currently the more affordable of the two stocks.
This table compares Paypal and NEWTEK Business Services’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|NEWTEK Business Services||70.19%||8.99%||4.10%|
NEWTEK Business Services pays an annual dividend of $1.60 per share and has a dividend yield of 7.3%. Paypal does not pay a dividend. NEWTEK Business Services pays out 82.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. NEWTEK Business Services has raised its dividend for 3 consecutive years.
This is a breakdown of recent recommendations and price targets for Paypal and NEWTEK Business Services, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|NEWTEK Business Services||0||1||2||0||2.67|
Paypal presently has a consensus price target of $107.41, suggesting a potential downside of 2.22%. NEWTEK Business Services has a consensus price target of $17.89, suggesting a potential downside of 18.03%. Given Paypal’s stronger consensus rating and higher probable upside, research analysts plainly believe Paypal is more favorable than NEWTEK Business Services.
Volatility & Risk
Paypal has a beta of 1.05, suggesting that its stock price is 5% more volatile than the S&P 500. Comparatively, NEWTEK Business Services has a beta of 1.39, suggesting that its stock price is 39% more volatile than the S&P 500.
Institutional & Insider Ownership
82.3% of Paypal shares are held by institutional investors. Comparatively, 19.2% of NEWTEK Business Services shares are held by institutional investors. 0.2% of Paypal shares are held by insiders. Comparatively, 6.3% of NEWTEK Business Services shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Paypal beats NEWTEK Business Services on 10 of the 17 factors compared between the two stocks.
PayPal Holdings, Inc. operates as a technology platform and digital payments company that enables digital and mobile payments on behalf of consumers and merchants worldwide. Its payment solutions include PayPal, PayPal Credit, Braintree, Venmo, Xoom, and iZettle products. The company’s Payments Platform allows consumers to send payments, withdraw funds to their bank accounts, and hold balances in their PayPal accounts in various currencies. It also offers gateway services that enable merchants to accept payments online with credit or debit cards. PayPal Holdings, Inc. was founded in 1998 and is headquartered in San Jose, California.
About NEWTEK Business Services
Newtek Business Services Corp. is a business development company specializing in providing financial and business services to the small-and medium-sized business market in the United States. The firm also seeks to invest in early stage businesses. The firm seeks to makes both debt and equity investments. Under debt investments, it focuses on first lien loans, which have terms of 1 to 25 years; second lien loans, which have terms of 5 to 25 years, and unsecured loans, which are provided to meet short-term funding needs and are repaid within 6 to 12 months. It operates through Electronic Payment Processing, Managed Technology Solutions, Small Business Finance, and Capcos segments. The company originates small business administration loans for the purpose of acquiring commercial real estate, machinery, equipment, and inventory, as well as to refinance debt and fund franchises, working capital, and business acquisitions; and offers small business loan servicing and consulting services to the Federal Deposit Insurance Corporation and various other financial institutions, as well as provides management services. Its electronic payment processing services include credit and debit card processing, check approval, ancillary processing equipment and software to merchants, eCommerce, electronic solutions to accept non-cash payments, check conversion, remote deposit capture, ACH processing, and electronic gift and loyalty card programs. The company also provides Website hosting, dedicated server, and cloud hosting services; Web design and development; Internet marketing; data storage and backup and other related services; and ecommerce services, such as payment processing, online shopping cart tools, Website design and Web related services; Accounts Receivable Financing, and The Secure Gateway. In addition, it offers Newtek Advantage, a mobile, real-time operating platform enabling a business to access data on a smartphone, tablet, laptop, or PC for eCommerce, credit/debit transactions, Website statistics, payroll, insurance, and business loans. Further, the company sells personal, commercial, and health/benefits lines of insurance products; and payroll management processing and employee tax filing services. It has strategic alliances with American International Group, CTAA, Navy Federal Credit Union, Credit Union National Association, Pershing, and others to provide agent services to small business clients. The firm seeks to invest in New York and Louisiana area. The firm seeks to invest $0.3 million to $3 million in businesses. It provides small business terms loans ranging from $0.05 million to $10 million. The firm also provides account receivable financing ranging from $0.05 million to $1.5 million. It also provides $0.05 million to $10 million financing to owner occupied real estate businesses whose average net income over the last 2 years must not exceed $2.5 million. Newtek Business Services Corp., formerly known as Newtek Business Services Inc., was incorporated on August 26, 2013 and is headquartered in Lake Success, New York with additional offices in Garden City, New York; Miami, Florida; Milwaukee, Wisconsin; New Orleans, Louisiana; and New York, New York.
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