Critical Review: Atlanticus (NASDAQ:ATLC) and Upstart (NASDAQ:UPST)

Atlanticus (NASDAQ:ATLC) and Upstart (NASDAQ:UPST) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, valuation, dividends, institutional ownership, earnings, risk and analyst recommendations.

Institutional & Insider Ownership

14.2% of Atlanticus shares are owned by institutional investors. Comparatively, 63.0% of Upstart shares are owned by institutional investors. 51.0% of Atlanticus shares are owned by insiders. Comparatively, 17.3% of Upstart shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

This table compares Atlanticus and Upstart’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Atlanticus	5.80%	25.17%	2.15%
Upstart	4.86%	9.73%	2.49%

Analyst Ratings

This is a summary of current recommendations and price targets for Atlanticus and Upstart, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Atlanticus	0	2	5	1	2.88
Upstart	2	8	8	0	2.33

Atlanticus presently has a consensus target price of $129.00, suggesting a potential upside of 29.32%. Upstart has a consensus target price of $34.44, suggesting a potential upside of 47.29%. Given Upstart’s higher probable upside, analysts plainly believe Upstart is more favorable than Atlanticus.

Earnings and Valuation

This table compares Atlanticus and Upstart”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Atlanticus	$1.97 billion	0.77	$122.20 million	$7.69	12.97
Upstart	$1.04 billion	2.18	$53.60 million	$0.49	47.71

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

Volatility and Risk

Atlanticus has a beta of 1.8, suggesting that its share price is 80% more volatile than the S&P 500. Comparatively, Upstart has a beta of 2.48, suggesting that its share price is 148% more volatile than the S&P 500.

Summary

Atlanticus beats Upstart on 8 of the 15 factors compared between the two stocks.

About Atlanticus

Atlanticus Holdings Corporation, a financial technology company, provides credit and related financial services and products to customers the United States. It operates in two segments, Credit as a Service, and Auto Finance. The Credit as a Service segment originates a range of consumer loan products, such as private label and general purpose credit cards originated by lenders through various channels, including retail and healthcare, direct mail solicitation, digital marketing, and partnerships with third parties; and offers credit to their customers for the purchase of various goods and services, including consumer electronics, furniture, elective medical procedures, healthcare, and home-improvements by partnering with retailers, healthcare providers, and other service providers. This segment also offers loan servicing, such as risk management and customer service outsourcing for third parties; and engages in testing and investment activities in consumer finance technology platforms. The Auto Finance segment purchases and/or services loans secured by automobiles from or for a pre-qualified network of independent automotive dealers and automotive finance companies in the buy-here, pay-here, and used car business. This segment also provides floor plan financing and installment lending products. It also invests in and services portfolios of credit card receivables. The company was founded in 1996 and is headquartered in Atlanta, Georgia.

About Upstart

Upstart Holdings, Inc., together with its subsidiaries, operates a cloud-based artificial intelligence (AI) lending platform in the United States. Its platform includes personal loans, automotive retail and refinance loans, home equity lines of credit, and small dollar loans that connects consumer demand for loans to its to bank and credit unions. Upstart Holdings, Inc. was founded in 2012 and is headquartered in San Mateo, California.