Contrasting Acacia Research (NASDAQ:ACTG) and Walker & Dunlop (NYSE:WD)

Walker & Dunlop (NYSE:WD) and Acacia Research (NASDAQ:ACTG) are both small-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, risk, earnings, analyst recommendations, valuation, institutional ownership and profitability.

Risk and Volatility

Walker & Dunlop has a beta of 1.45, suggesting that its stock price is 45% more volatile than the S&P 500. Comparatively, Acacia Research has a beta of 0.44, suggesting that its stock price is 56% less volatile than the S&P 500.

Profitability

This table compares Walker & Dunlop and Acacia Research’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Walker & Dunlop	2.94%	7.25%	2.31%
Acacia Research	-5.39%	0.44%	0.33%

Insider & Institutional Ownership

81.0% of Walker & Dunlop shares are held by institutional investors. Comparatively, 86.7% of Acacia Research shares are held by institutional investors. 4.0% of Walker & Dunlop shares are held by company insiders. Comparatively, 1.7% of Acacia Research shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Walker & Dunlop and Acacia Research”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Walker & Dunlop	$1.29 billion	1.14	$57.08 million	$1.12	38.12
Acacia Research	$278.37 million	1.59	$21.68 million	($0.15)	-30.27

Walker & Dunlop has higher revenue and earnings than Acacia Research. Acacia Research is trading at a lower price-to-earnings ratio than Walker & Dunlop, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Walker & Dunlop and Acacia Research, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Walker & Dunlop	1	0	5	0	2.67
Acacia Research	1	0	1	0	2.00

Walker & Dunlop presently has a consensus target price of $64.00, indicating a potential upside of 49.92%. Acacia Research has a consensus target price of $6.00, indicating a potential upside of 32.16%. Given Walker & Dunlop’s stronger consensus rating and higher probable upside, equities analysts plainly believe Walker & Dunlop is more favorable than Acacia Research.

Dividends

Walker & Dunlop pays an annual dividend of $2.72 per share and has a dividend yield of 6.4%. Acacia Research pays an annual dividend of $0.50 per share and has a dividend yield of 11.0%. Walker & Dunlop pays out 242.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Acacia Research pays out -333.3% of its earnings in the form of a dividend. Walker & Dunlop has increased its dividend for 7 consecutive years. Acacia Research is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Walker & Dunlop beats Acacia Research on 13 of the 17 factors compared between the two stocks.

About Walker & Dunlop

Walker & Dunlop, Inc. is a holding company, which engages in the provision of commercial real estate and finance services. It operates through the following segments: Capital Markets, Servicing and Asset Management, and Corporate. The Capital Markets segment offers a comprehensive range of commercial real estate finance products to customers. The Servicing and Asset Management segment includes servicing and asset-managing and managing third-party capital investments. The Corporate segment consists primarily of the company’s treasury operations and other corporate-level activities. The company was founded by Oliver Walker and Laird Dunlop in 1937 and is headquartered in Bethesda, MD.

About Acacia Research

Acacia is a publicly traded (Nasdaq: ACTG) company that is focused on acquiring and operating businesses across the industrial, energy and technology sectors where it believes it can leverage its expertise, significant capital base, and deep industry relationships to drive value. Acacia evaluates opportunities based on the attractiveness of the underlying cash flows, without regard to a specific investment horizon. Acacia operates its businesses based on three key principles of people, process, and performance and has built a management team with demonstrated expertise in research, transactions and execution, and operations and management.