Analyzing Burford Capital (NYSE:BUR) and Heritage Global (NASDAQ:HGBL)

Heritage Global (NASDAQ:HGBL) and Burford Capital (NYSE:BUR) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their dividends, valuation, analyst recommendations, risk, institutional ownership, earnings and profitability.

Insider and Institutional Ownership

33.5% of Heritage Global shares are owned by institutional investors. 14.0% of Heritage Global shares are owned by company insiders. Comparatively, 8.9% of Burford Capital shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Heritage Global and Burford Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Heritage Global	7.33%	5.47%	4.17%
Burford Capital	37.08%	7.48%	3.88%

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Heritage Global and Burford Capital, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Heritage Global	1	1	1	1	2.50
Burford Capital	2	0	2	0	2.00

Heritage Global presently has a consensus price target of $4.00, suggesting a potential upside of 191.97%. Burford Capital has a consensus price target of $18.00, suggesting a potential upside of 88.09%. Given Heritage Global’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Heritage Global is more favorable than Burford Capital.

Valuation and Earnings

This table compares Heritage Global and Burford Capital”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Heritage Global	$49.89 million	0.95	$5.18 million	$0.09	15.22
Burford Capital	$267.25 million	7.84	$146.48 million	$0.38	25.18

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

Volatility and Risk

Heritage Global has a beta of 0.56, indicating that its stock price is 44% less volatile than the S&P 500. Comparatively, Burford Capital has a beta of 0.56, indicating that its stock price is 44% less volatile than the S&P 500.

About Heritage Global

Heritage Global Inc., together with its subsidiaries, operates as an asset services company with focus on financial and industrial asset transactions. The company operates in three segments: Auction and Liquidation, Refurbishment & Resale, and Brokerage. It provides a suite of market making, acquisitions, refurbishment, dispositions, valuations, and secured lending services. The company focuses on identifying, valuing, acquiring, and monetizing underlying tangible assets. It acts as an adviser, as well as a principal, acquiring, or brokering manufacturing facilities; surplus industrial machinery and equipment; industrial inventories; and charged-off receivable portfolios. The company was formerly known as Counsel RB Capital Inc. and changed its name to Heritage Global, Inc. in August 2013. Heritage Global, Inc. was founded in 1937 and is headquartered in San Diego, California.

About Burford Capital

Burford Capital Limited provides legal finance products and services worldwide. The company operates through two segments, Capital Provision, and Asset Management and Other Provision. The Capital Provision segment provides capital to the legal industry or in connection with legal matters directly and through investment in private funds; legal risk management services; lower risk legal finance business focusing on pre-settlement litigation matters with lower risk and lower expected returns; post-settlement finance; and complex strategies in which it acts as a principal and acquires assets that are mispriced. The Asset Management and Other Services segment provides services to the legal industry, including litigation insurance. Burford Capital Limited was incorporated in 2009 and is based in Saint Peter Port, Guernsey.