Head to Head Contrast: Burford Capital (OTCMKTS:BRFRF) versus PennyMac Financial Services (NYSE:PFSI)

PennyMac Financial Services (NYSE:PFSI) and Burford Capital (OTCMKTS:BRFRF) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, risk, analyst recommendations, earnings, dividends, profitability and institutional ownership.

Insider & Institutional Ownership

57.9% of PennyMac Financial Services shares are owned by institutional investors. 15.2% of PennyMac Financial Services shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings for PennyMac Financial Services and Burford Capital, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PennyMac Financial Services	2	4	4	0	2.20
Burford Capital	0	0	0	0	0.00

PennyMac Financial Services currently has a consensus price target of $104.88, indicating a potential upside of 39.65%. Given PennyMac Financial Services’ stronger consensus rating and higher possible upside, research analysts clearly believe PennyMac Financial Services is more favorable than Burford Capital.

Valuation & Earnings

This table compares PennyMac Financial Services and Burford Capital”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PennyMac Financial Services	$2.05 billion	1.91	$501.08 million	$7.28	10.32
Burford Capital	N/A	N/A	N/A	N/A	N/A

PennyMac Financial Services has higher revenue and earnings than Burford Capital.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
PennyMac Financial Services	17.74%	11.18%	1.65%
Burford Capital	N/A	N/A	N/A

Summary

PennyMac Financial Services beats Burford Capital on 9 of the 9 factors compared between the two stocks.

About PennyMac Financial Services

PennyMac Financial Services, Inc., through its subsidiaries, engages in the mortgage banking and investment management activities in the United States. The company operates through three segments: Production, Servicing, and Investment Management. The Production segment is involved in the origination, acquisition, and sale of loans. This segment sources residential conventional and government-insured or guaranteed mortgage loans through correspondent production, consumer direct lending, and broker direct lending. The Servicing segment performs loan servicing for both newly originated loans that are under holding for sale and loans services for others. The segment performs loan administration, collection, and default management activities, including the collection and remittance of loan payments; responds to customer inquiries; provides accounting for principal and interest; holds custodial funds for the payment of property taxes and insurance premiums; counsels delinquent borrowers; and supervising foreclosures and property dispositions, as well as administers loss mitigation activities, such as modification and forbearance programs. The Investment Management segment is involved in sourcing, performing diligence, bidding, and closing investment asset acquisitions; managing correspondent production activities for PennyMac Mortgage Investment Trust; and managing acquired assets. The company was founded in 2008 and is headquartered in Westlake Village, California.

About Burford Capital

Burford Capital Ltd. provides investment capital, financial and risk solutions for litigation. It operates through following segments: Capital Provision, Asset Management and Services and Other Corporate. The company was founded by Christopher P. Bogart, Elizabeth O’Connell and Jonathan T. Molot on September 11, 2009 and is headquartered in St. Peter Port, Guernsey.