Cannae (NYSE:CNNE) & Affirm (NASDAQ:AFRM) Critical Analysis

Affirm (NASDAQ:AFRM) and Cannae (NYSE:CNNE) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, earnings, risk, institutional ownership, profitability, analyst recommendations and valuation.

Earnings & Valuation

This table compares Affirm and Cannae”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Affirm	$4.26 billion	5.32	$1.93 billion	$5.52	12.18
Cannae	$423.60 million	1.60	-$513.20 million	($3.02)	-5.17

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

Insider and Institutional Ownership

69.3% of Affirm shares are held by institutional investors. Comparatively, 88.1% of Cannae shares are held by institutional investors. 11.0% of Affirm shares are held by insiders. Comparatively, 10.9% of Cannae shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and price targets for Affirm and Cannae, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Affirm	0	8	24	0	2.75
Cannae	1	1	2	0	2.25

Affirm presently has a consensus target price of $98.78, suggesting a potential upside of 46.97%. Cannae has a consensus target price of $16.50, suggesting a potential upside of 5.68%. Given Affirm’s stronger consensus rating and higher possible upside, analysts plainly believe Affirm is more favorable than Cannae.

Profitability

This table compares Affirm and Cannae’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Affirm	45.29%	47.91%	14.46%
Cannae	-38.18%	-14.10%	-10.60%

Volatility and Risk

Affirm has a beta of 3.61, suggesting that its stock price is 261% more volatile than the S&P 500. Comparatively, Cannae has a beta of 1.21, suggesting that its stock price is 21% more volatile than the S&P 500.

Summary

Affirm beats Cannae on 13 of the 14 factors compared between the two stocks.

About Affirm

Affirm Holdings, Inc. operates a platform for digital and mobile-first commerce in the United States, Canada, and internationally. The company's platform includes point-of-sale payment solution for consumers, merchant commerce solutions, and a consumer-focused app. Its commerce platform, agreements with originating banks, and capital markets partners enables consumers to pay for a purchase over time with terms ranging up to 60 months. The company has active merchants covering small businesses, large enterprises, direct-to-consumer brands, brick-and-mortar stores, and companies with an omni-channel presence. Its merchants represent a range of industries, including sporting goods and outdoors, furniture and homewares, travel and ticketing, apparel, accessories, consumer electronics, and jewelry. Affirm Holdings, Inc. was founded in 2012 and is headquartered in San Francisco, California.

About Cannae

Cannae Holdings, Inc. is a principal investment firm. The firm primarily invests in restaurants, technology enabled healthcare services, financial services and more. It takes both minority and majority stakes. Cannae Holdings, Inc. was founded in 2014 and is based in Las Vegas, Nevada.