Financial Analysis: Equitable (NYSE:EQH) vs. Burford Capital (NYSE:BUR)

Equitable (NYSE:EQH) and Burford Capital (NYSE:BUR) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, valuation, analyst recommendations, dividends, earnings and profitability.

Profitability

This table compares Equitable and Burford Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Equitable	-8.72%	511.35%	0.61%
Burford Capital	15.14%	10.24%	4.35%

Dividends

Equitable pays an annual dividend of $1.20 per share and has a dividend yield of 2.3%. Burford Capital pays an annual dividend of $0.12 per share and has a dividend yield of 2.7%. Equitable pays out -36.3% of its earnings in the form of a dividend. Burford Capital pays out -1.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Equitable has increased its dividend for 2 consecutive years.

Earnings and Valuation

This table compares Equitable and Burford Capital”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Equitable	$11.66 billion	1.24	-$1.38 billion	($3.31)	-16.02
Burford Capital	$413.36 million	2.32	$62.57 million	($7.71)	-0.57

Burford Capital has lower revenue, but higher earnings than Equitable. Equitable is trading at a lower price-to-earnings ratio than Burford Capital, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Equitable has a beta of 1.09, indicating that its share price is 9% more volatile than the S&P 500. Comparatively, Burford Capital has a beta of 1.25, indicating that its share price is 25% more volatile than the S&P 500.

Insider & Institutional Ownership

92.7% of Equitable shares are owned by institutional investors. 1.0% of Equitable shares are owned by insiders. Comparatively, 8.9% of Burford Capital shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and recommmendations for Equitable and Burford Capital, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Equitable	1	2	10	1	2.79
Burford Capital	2	2	2	0	2.00

Equitable currently has a consensus price target of $61.17, indicating a potential upside of 15.37%. Burford Capital has a consensus price target of $9.33, indicating a potential upside of 113.68%. Given Burford Capital’s higher possible upside, analysts plainly believe Burford Capital is more favorable than Equitable.

About Equitable

Equitable Holdings, Inc., together with its consolidated subsidiaries, operates as a diversified financial services company worldwide. The company operates through six segments: Individual Retirement, Group Retirement, Investment Management and Research, Protection Solutions, Wealth Management, and Legacy. The Individual Retirement segment offers a suite of variable annuity products primarily to affluent and high net worth individuals. The Group Retirement segment provides tax-deferred investment and retirement services or products to plans sponsored by educational entities, municipalities, and not-for-profit entities, as well as small and medium-sized businesses. The Investment Management and Research segment offers diversified investment management, research, and related services to various clients through institutional. The Protection Solutions segment provides life insurance products, such as VUL insurance and IUL insurance, term life, and employee benefits business, such as dental, vision, life, as well as short- and long-term disability insurance products to small and medium-sized businesses. The Wealth Management segment offers discretionary and non-discretionary investment advisory accounts, financial planning and advice, life insurance, and annuity products. The Legacy segment consists of the capital intensive fixed-rate GMxB business that includes ROP death benefits. The company was formerly known as AXA Equitable Holdings, Inc. and changed its name to Equitable Holdings, Inc. in January 2020. Equitable Holdings, Inc. was founded in 1859 and is based in New York, New York.

About Burford Capital

Burford Capital Limited provides legal finance products and services worldwide. The company operates through two segments, Capital Provision, and Asset Management and Other Provision. The Capital Provision segment provides capital to the legal industry or in connection with legal matters directly and through investment in private funds; legal risk management services; lower risk legal finance business focusing on pre-settlement litigation matters with lower risk and lower expected returns; post-settlement finance; and complex strategies in which it acts as a principal and acquires assets that are mispriced. The Asset Management and Other Services segment provides services to the legal industry, including litigation insurance. Burford Capital Limited was incorporated in 2009 and is based in Saint Peter Port, Guernsey.