Envestnet (NASDAQ: NEWT) and NEWTEK Business Services (NASDAQ:NEWT) are both business services companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, profitability, analyst recommendations, valuation, institutional ownership, dividends and risk.
Risk and Volatility
Envestnet has a beta of 1.81, indicating that its share price is 81% more volatile than the S&P 500. Comparatively, NEWTEK Business Services has a beta of 1.15, indicating that its share price is 15% more volatile than the S&P 500.
This table compares Envestnet and NEWTEK Business Services’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|NEWTEK Business Services||105.34%||8.86%||4.52%|
NEWTEK Business Services pays an annual dividend of $1.68 per share and has a dividend yield of 7.2%. Envestnet does not pay a dividend. NEWTEK Business Services pays out 94.9% 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 2 consecutive years.
Earnings and Valuation
This table compares Envestnet and NEWTEK Business Services’ revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Envestnet||$683.68 million||3.96||-$3.28 million||$0.88||67.78|
|NEWTEK Business Services||$38.91 million||11.28||$38.97 million||$1.77||13.20|
NEWTEK Business Services has lower revenue, but higher earnings than Envestnet. NEWTEK Business Services is trading at a lower price-to-earnings ratio than Envestnet, indicating that it is currently the more affordable of the two stocks.
This is a summary of recent ratings and recommmendations for Envestnet and NEWTEK Business Services, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|NEWTEK Business Services||0||3||0||0||2.00|
Envestnet currently has a consensus price target of $60.13, indicating a potential upside of 0.80%. NEWTEK Business Services has a consensus price target of $19.00, indicating a potential downside of 18.66%. Given Envestnet’s stronger consensus rating and higher probable upside, research analysts clearly believe Envestnet is more favorable than NEWTEK Business Services.
Insider & Institutional Ownership
98.2% of Envestnet shares are held by institutional investors. Comparatively, 21.7% of NEWTEK Business Services shares are held by institutional investors. 5.5% of Envestnet shares are held by company insiders. Comparatively, 6.3% of NEWTEK Business Services shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
Envestnet beats NEWTEK Business Services on 10 of the 17 factors compared between the two stocks.
Envestnet, Inc., together with its subsidiaries, provides financial and wealth management software and services in the United States and internationally. It operates through Envestnet and Envestnet | Yodlee business segments. The company's product and services suites include Envestnet | Enterprise, which provides an end-to-end open architecture wealth management platform, and sells data aggregation and reporting, data analytics, and digital advice capabilities; Envestnet | Tamarac that provides a portfolio of accounting, rebalancing, trading, performance reporting, and client relationship management software, primarily to high-end registered investment advisers; Envestnet | Retirement Solutions, which offers a suite of services for advisor-sold retirement plans; and Envestnet | Portfolio Management Consultants that provides research, due diligence, and consulting services to assist advisors in creating investment solutions for their clients, and patented portfolio overlay and tax optimization services. It also provides Envestnet | Yodlee data aggregation and data analytics platform, which offers cloud-based innovation for digital financial services. The company serves banks, wealth management and brokerage firms, Internet services companies, and other financial institutions. Envestnet, Inc. was founded in 1999 and is headquartered in Chicago, Illinois.
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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