Comparing RE/MAX (RMAX) & Nationstar Mortgage (NYSE:NSM)

RE/MAX (NYSE: RMAX) and Nationstar Mortgage (NYSE:NSM) are both small-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, institutional ownership, earnings, dividends, profitability and risk.

Insider & Institutional Ownership

98.4% of Nationstar Mortgage shares are owned by institutional investors. 0.4% of RE/MAX shares are owned by insiders. Comparatively, 0.8% of Nationstar Mortgage shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

RE/MAX pays an annual dividend of $0.72 per share and has a dividend yield of 1.5%. Nationstar Mortgage does not pay a dividend. RE/MAX pays out 55.0% of its earnings in the form of a dividend. Nationstar Mortgage has increased its dividend for 3 consecutive years.

Analyst Ratings

This is a breakdown of current recommendations and price targets for RE/MAX and Nationstar Mortgage, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
RE/MAX 2 4 2 0 2.00
Nationstar Mortgage 1 4 4 0 2.33

RE/MAX presently has a consensus target price of $61.67, suggesting a potential upside of 25.85%. Nationstar Mortgage has a consensus target price of $18.50, suggesting a potential downside of 2.32%. Given RE/MAX’s higher possible upside, equities analysts plainly believe RE/MAX is more favorable than Nationstar Mortgage.

Profitability

This table compares RE/MAX and Nationstar Mortgage’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
RE/MAX 12.45% 79.94% 11.81%
Nationstar Mortgage 9.34% 8.88% 0.80%

Valuation and Earnings

This table compares RE/MAX and Nationstar Mortgage’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
RE/MAX $176.30 million 4.92 $22.73 million $1.31 37.40
Nationstar Mortgage $1.93 billion 0.96 $19.00 million $1.85 10.24

RE/MAX has higher earnings, but lower revenue than Nationstar Mortgage. Nationstar Mortgage is trading at a lower price-to-earnings ratio than RE/MAX, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

RE/MAX has a beta of 0.8, meaning that its share price is 20% less volatile than the S&P 500. Comparatively, Nationstar Mortgage has a beta of 1.41, meaning that its share price is 41% more volatile than the S&P 500.

Summary

Nationstar Mortgage beats RE/MAX on 9 of the 17 factors compared between the two stocks.

RE/MAX Company Profile

RE/MAX Holdings, Inc. is a franchisor in the real estate industry, franchising real estate brokerages around the world under the RE/MAX brand and mortgage brokerages within the United States under the Motto Mortgage brand. The Company is a franchised business, with all of the RE/MAX branded brokerage office locations being operated by franchisees, including RE/MAX, LLC, which owns the RE/MAX brand, and sells franchises and franchising rights; Independent Regional Franchise Owner, which owns rights to sell brokerage franchises in a specified region; Franchisee (or Broker-Owner), which operates a RE/MAX-branded brokerage office, lists properties and recruits agents, and Agent (or Sales Associate), including branded independent contractors operating out of local franchise brokerage offices. Under Motto business, the Company operates as a mortgage brokerage franchisor. As a franchisor, the Company helps its Motto franchisees to establish independent mortgage brokerage companies.

Nationstar Mortgage Company Profile

Nationstar Mortgage Holdings Inc. provides servicing, origination and transaction based services principally to single-family residences throughout the United States. The Company operates through three segments: Servicing, Originations and Xome. The Company provides residential loan services in the United States. The Company also operates an integrated residential loan origination platform that is primarily focused on customer retention. Its Xome subsidiary offers an array of complementary services related to the purchase and disposition of residential real estate. It provides non-bank services and residential mortgage services in the United States conducting operations through its Nationstar Mortgage and Champion Mortgage brands. It originates and purchases conventional mortgage loans conforming to the underwriting standards of the government sponsored entities, which it collectively refers to as Agency loans. The Xome segment is a provider of technology and data-enhanced solutions.

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