NEWTEK Business Services (NASDAQ:NEWT) and Alibaba Group (NYSE:BABA) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, valuation, risk, dividends, earnings, analyst recommendations and institutional ownership.
This is a breakdown of current recommendations for NEWTEK Business Services and Alibaba Group, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|NEWTEK Business Services||0||1||2||0||2.67|
NEWTEK Business Services presently has a consensus target price of $17.89, indicating a potential downside of 22.54%. Alibaba Group has a consensus target price of $218.12, indicating a potential upside of 25.86%. Given Alibaba Group’s stronger consensus rating and higher possible upside, analysts clearly believe Alibaba Group is more favorable than NEWTEK Business Services.
Institutional and Insider Ownership
18.5% of NEWTEK Business Services shares are owned by institutional investors. Comparatively, 40.7% of Alibaba Group shares are owned by institutional investors. 6.8% of NEWTEK Business Services shares are owned by insiders. Comparatively, 12.5% of Alibaba Group shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
Risk & Volatility
NEWTEK Business Services has a beta of 1.32, meaning that its share price is 32% more volatile than the S&P 500. Comparatively, Alibaba Group has a beta of 2.3, meaning that its share price is 130% more volatile than the S&P 500.
Valuation and Earnings
This table compares NEWTEK Business Services and Alibaba Group’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|NEWTEK Business Services||$49.51 million||8.92||$35.68 million||$1.94||11.91|
|Alibaba Group||$56.15 billion||N/A||$13.10 billion||$3.59||48.27|
Alibaba Group has higher revenue and earnings than NEWTEK Business Services. NEWTEK Business Services is trading at a lower price-to-earnings ratio than Alibaba Group, indicating that it is currently the more affordable of the two stocks.
This table compares NEWTEK Business Services and Alibaba Group’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|NEWTEK Business Services||70.19%||8.99%||4.10%|
NEWTEK Business Services pays an annual dividend of $1.84 per share and has a dividend yield of 8.0%. Alibaba Group does not pay a dividend. NEWTEK Business Services pays out 94.8% 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 3 consecutive years.
Alibaba Group beats NEWTEK Business Services on 14 of the 17 factors compared between the two stocks.
NEWTEK Business Services Company Profile
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.
Alibaba Group Company Profile
Alibaba Group Holding Limited, through its subsidiaries, operates as an online and mobile commerce company in the People’s Republic of China and internationally. The company operates in four segments: Core Commerce, Cloud Computing, Digital Media and Entertainment, and Innovation Initiatives and Others. It operates Taobao Marketplace, a mobile commerce destination; Tmall, a third-party platform for brands and retailers; Rural Taobao program that enables rural residents and businesses to sell agricultural products to urban consumers; 1688.com, an online wholesale marketplace; Alibaba.com, an online wholesale marketplace; AliExpress, a retail marketplace; Lazada, an e-commerce platform; and Lingshoutong, a digital sourcing platform. The company also provides pay-for-performance and display marketing services; and Taobao Ad Network and Exchange, a real-time bidding online marketing exchange in China; and digital payment and financial technology platform services. In addition, it offers cloud computing services, including elastic computing, database, storage, virtualization network, large scale computing, security, and management and application services, big data analytics, a machine learning platform, and Internet of Things and other service for enterprises; and payment and escrow services; and movies, TV drama series, online dramas, variety shows, news feeds, games, literature and music, and other areas through various content platforms, as well as develops and operates mobile browsers. Further, the company provides AutoNavi, a mobile digital map, navigation, and real-time traffic information; DingTalk, a proprietary enterprise communication and collaboration platform; and Tmall Genie, an AI-powered voice assistant, which helps consumers to shop, order local services, search for information, control smart appliances, and play interactive content. The company was founded in 1999 and is based in Hangzhou, the People’s Republic of China.
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