OneMain (NYSE:OMF) & Encore Capital Group (NASDAQ:ECPG) Critical Analysis

Encore Capital Group (NASDAQ:ECPG) and OneMain (NYSE:OMF) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, valuation, profitability, dividends, risk and earnings.

Analyst Ratings

This is a breakdown of current ratings and target prices for Encore Capital Group and OneMain, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Encore Capital Group	1	0	3	1	2.80
OneMain	0	4	7	1	2.75

Encore Capital Group currently has a consensus price target of $61.67, suggesting a potential upside of 30.35%. OneMain has a consensus price target of $63.13, suggesting a potential upside of 5.04%. Given Encore Capital Group’s stronger consensus rating and higher probable upside, research analysts plainly believe Encore Capital Group is more favorable than OneMain.

Volatility and Risk

Encore Capital Group has a beta of 1.43, suggesting that its stock price is 43% more volatile than the S&P 500. Comparatively, OneMain has a beta of 1.37, suggesting that its stock price is 37% more volatile than the S&P 500.

Insider and Institutional Ownership

85.8% of OneMain shares are held by institutional investors. 2.5% of Encore Capital Group shares are held by insiders. Comparatively, 0.4% of OneMain shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Encore Capital Group and OneMain’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Encore Capital Group	-6.07%	19.61%	3.47%
OneMain	12.63%	20.65%	2.57%

Valuation & Earnings

This table compares Encore Capital Group and OneMain”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Encore Capital Group	$1.47 billion	0.74	-$139.24 million	($3.74)	-12.65
OneMain	$4.87 billion	1.45	$509.00 million	$5.90	10.19

OneMain has higher revenue and earnings than Encore Capital Group. Encore Capital Group is trading at a lower price-to-earnings ratio than OneMain, indicating that it is currently the more affordable of the two stocks.

Summary

OneMain beats Encore Capital Group on 9 of the 14 factors compared between the two stocks.

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.

About OneMain

OneMain Holdings, Inc., a financial service holding company, engages in the consumer finance and insurance businesses in the United States. It originates, underwrites, and services personal loans secured by automobiles, other titled collateral, or unsecured. The company also offers credit cards; optional credit insurance products, including life, disability, and involuntary unemployment insurance; optional non-credit insurance; guaranteed asset protection coverage as a waiver product or insurance; and membership plans. It sells its products through its website. The company was formerly known as Springleaf Holdings, Inc. and changed its name to OneMain Holdings, Inc. in November 2015. OneMain Holdings, Inc. was founded in 1912 and is based in Evansville, Indiana.