Analyzing NEWTEK Business Services (NEWT) and MAXIMUS (MMS)

NEWTEK Business Services (NASDAQ: NEWT) and MAXIMUS (NYSE:MMS) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, profitability, valuation, risk, earnings, institutional ownership and dividends.

Risk & Volatility

NEWTEK Business Services has a beta of 1.11, meaning that its share price is 11% more volatile than the S&P 500. Comparatively, MAXIMUS has a beta of 1.11, meaning that its share price is 11% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and price targets for NEWTEK Business Services and MAXIMUS, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NEWTEK Business Services 0 2 0 0 2.00
MAXIMUS 0 3 0 0 2.00

NEWTEK Business Services presently has a consensus price target of $19.00, indicating a potential downside of 1.76%. MAXIMUS has a consensus price target of $69.50, indicating a potential upside of 11.25%. Given MAXIMUS’s higher probable upside, analysts plainly believe MAXIMUS is more favorable than NEWTEK Business Services.

Dividends

NEWTEK Business Services pays an annual dividend of $1.60 per share and has a dividend yield of 8.3%. MAXIMUS pays an annual dividend of $0.18 per share and has a dividend yield of 0.3%. NEWTEK Business Services pays out 90.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. MAXIMUS pays out 5.9% of its earnings in the form of a dividend.

Profitability

This table compares NEWTEK Business Services and MAXIMUS’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NEWTEK Business Services 107.67% 8.74% 4.51%
MAXIMUS 9.15% 21.67% 15.50%

Insider & Institutional Ownership

21.7% of NEWTEK Business Services shares are owned by institutional investors. Comparatively, 94.0% of MAXIMUS shares are owned by institutional investors. 6.6% of NEWTEK Business Services shares are owned by insiders. Comparatively, 2.5% of MAXIMUS shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares NEWTEK Business Services and MAXIMUS’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
NEWTEK Business Services $38.91 million 9.28 $38.97 million $1.77 10.93
MAXIMUS $2.45 billion 1.66 $209.42 million $3.03 20.62

MAXIMUS has higher revenue and earnings than NEWTEK Business Services. NEWTEK Business Services is trading at a lower price-to-earnings ratio than MAXIMUS, indicating that it is currently the more affordable of the two stocks.

Summary

MAXIMUS beats NEWTEK Business Services on 9 of the 13 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.

MAXIMUS Company Profile

MAXIMUS, Inc. provides business process services (BPS) to government health and human services programs in the United States, the United Kingdom, Australia, Canada, Singapore, and Saudi Arabia. The company's Health Services segment offers various BPS, appeals, and assessments, as well as related consulting services for state, provincial, and national government programs comprising Medicaid, Children's Health Insurance Program, the Affordable Care Act, Health Insurance British Columbia, the Health Assessment Advisory Service, and Preadmission Screening and Resident Reviews. Its services include health insurance exchange customer contact center operations and support; health insurance program eligibility and enrollment; beneficiary outreach and education; application assistance and independent health plan enrollment counseling; premium payment processing and administration; eHealth solutions; independent disability, long-term sick, and health assessments; occupational health clinical assessments; and specialized program consulting services. The company's U.S. Federal Services segment offers services, including centralized customer contact centers and support services; documents and records management; and case management, citizen engagement, and consumer education; independent medical reviews and worker's compensation benefit appeals; health benefit appeals; eligibility appeals; modernization of systems and IT infrastructure; infrastructure operations and support; software development, operations, and management; and data analytics. Its Human Services segment provides national, state, and local human services agencies with various BPS and related consulting services for welfare-to-work, child support, and higher education; and management tools and professional consulting, program consulting, and tax credit and employer services. MAXIMUS, Inc. was founded in 1975 and is headquartered in Reston, Virginia.

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