Western Union Company (The) (WU) & Newtek Business Services Corp. (NEWT) Head to Head Survey

Newtek Business Services Corp. (NASDAQ: NEWT) and Western Union Company (The) (NYSE:WU) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, dividends, valuation, earnings, risk, analyst recommendations and profitability.

Profitability

This table compares Newtek Business Services Corp. and Western Union Company (The)’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Newtek Business Services Corp. 81.35% 7.97% 4.23%
Western Union Company (The) 3.50% 92.41% 9.04%

Institutional and Insider Ownership

24.0% of Newtek Business Services Corp. shares are owned by institutional investors. 6.7% of Newtek Business Services Corp. shares are owned by insiders. Comparatively, 1.1% of Western Union Company (The) shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Dividends

Newtek Business Services Corp. pays an annual dividend of $1.60 per share and has a dividend yield of 9.6%. Western Union Company (The) pays an annual dividend of $0.70 per share and has a dividend yield of 3.7%. Newtek Business Services Corp. pays out 85.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Western Union Company (The) pays out 179.5% 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 Corp. has increased its dividend for 2 consecutive years. Newtek Business Services Corp. is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares Newtek Business Services Corp. and Western Union Company (The)’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Newtek Business Services Corp. $35.85 million 8.13 $2.91 million $1.88 8.89
Western Union Company (The) $5.43 billion 1.61 $1.35 billion $0.39 48.41

Western Union Company (The) has higher revenue and earnings than Newtek Business Services Corp.. Newtek Business Services Corp. is trading at a lower price-to-earnings ratio than Western Union Company (The), indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Newtek Business Services Corp. and Western Union Company (The), as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Newtek Business Services Corp. 0 2 1 0 2.33
Western Union Company (The) 4 6 1 0 1.73

Newtek Business Services Corp. currently has a consensus price target of $17.00, suggesting a potential upside of 1.74%. Western Union Company (The) has a consensus price target of $20.20, suggesting a potential upside of 6.99%. Given Western Union Company (The)’s higher probable upside, analysts plainly believe Western Union Company (The) is more favorable than Newtek Business Services Corp..

Volatility & Risk

Newtek Business Services Corp. has a beta of 1.39, meaning that its share price is 39% more volatile than the S&P 500. Comparatively, Western Union Company (The) has a beta of 1.19, meaning that its share price is 19% more volatile than the S&P 500.

Summary

Newtek Business Services Corp. beats Western Union Company (The) on 10 of the 16 factors compared between the two stocks.

Newtek Business Services Corp. Company Profile

Newtek Business Services Corp. is an internally managed non-diversified closed-end management investment company. The Company’s investment objective is to generate both current income and capital appreciation primarily through loans originated by its small business finance platform and its equity investments in certain portfolio companies that it controls. The Company is a national non-bank lender that provides, together with its controlled portfolio companies, a range of business services and financial products under the Newtek brand to the small and medium-sized business (SMB) market. The Company issues debt and makes equity investments in portfolio companies in various industries. Its products and services include Business Lending including the United States Small Business Administration (SBA) 7(a) and 504 lending, Electronic Payment Processing, Managed Technology Solutions (Cloud Computing), Data Backup, and Payroll and Benefits Solutions to SMB accounts across all industries.

Western Union Company (The) Company Profile

The Western Union Company (Western Union) is a provider of money movement and payment services. The Company operates through three segments: Consumer-to-Consumer, Consumer-to-Business and Business Solutions. The Company’s Consumer-to-Consumer segment facilitates money transfers between two consumers, primarily through a network of third-party agents. The Company’s Consumer-to-Business segment provides options to make one-time or recurring payments from consumers to businesses and other organizations, including utilities, auto finance companies, mortgage servicers, financial service providers and government agencies. Its Consumer-to-Business payments services are available through a range of services that include Speedpay, Pago Facil and Western Union Payments. Western Union’s Business Solutions segment facilitates payment and foreign exchange solutions, primarily cross-border, cross-currency transactions, for small and medium size enterprises and other organizations and individuals.

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