Head to Head Analysis: PennyMac Financial Services (NYSE:PFSI) & Paymentus (NYSE:PAY)

Paymentus (NYSE:PAY) and PennyMac Financial Services (NYSE:PFSI) are both mid-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their valuation, earnings, profitability, analyst recommendations, risk, institutional ownership and dividends.

Valuation and Earnings

This table compares Paymentus and PennyMac Financial Services”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Paymentus	$1.20 billion	3.34	$66.94 million	$0.66	48.09
PennyMac Financial Services	$4.36 billion	0.70	$501.08 million	$7.28	8.08

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Paymentus	6.24%	15.26%	12.80%
PennyMac Financial Services	17.74%	11.18%	1.65%

Insider & Institutional Ownership

78.4% of Paymentus shares are held by institutional investors. Comparatively, 57.9% of PennyMac Financial Services shares are held by institutional investors. 55.7% of Paymentus shares are held by company insiders. Comparatively, 15.2% of PennyMac Financial Services shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings for Paymentus and PennyMac Financial Services, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Paymentus	0	4	2	2	2.75
PennyMac Financial Services	2	4	4	0	2.20

Paymentus currently has a consensus price target of $38.67, suggesting a potential upside of 21.83%. PennyMac Financial Services has a consensus price target of $100.00, suggesting a potential upside of 70.01%. Given PennyMac Financial Services’ higher probable upside, analysts plainly believe PennyMac Financial Services is more favorable than Paymentus.

Volatility & Risk

Paymentus has a beta of 1.34, indicating that its share price is 34% more volatile than the S&P 500. Comparatively, PennyMac Financial Services has a beta of 1.45, indicating that its share price is 45% more volatile than the S&P 500.

Summary

Paymentus beats PennyMac Financial Services on 8 of the 15 factors compared between the two stocks.

About Paymentus

Paymentus Holdings, Inc. provides cloud-based bill payment technology and solutions in the United States and internationally. The company offers electronic bill presentment and payment services, enterprise customer communication, and self-service revenue management to billers through a software-as-a-service technology platform. Its platform's payment processing includes credit cards, debit cards, eChecks, and digital wallets. It serves utility, financial service, government, insurance, telecommunication, real estate management, education, consumer finance, healthcare, and small business industries. The company was founded in 2004 and is headquartered in Charlotte, North Carolina.

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.