Newtek Business Services (NASDAQ:NEWT – Get Rating) and Loyalty Ventures (NASDAQ:LYLT – Get Rating) are both small-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, profitability, dividends, valuation, analyst recommendations, risk and earnings.
Risk & Volatility
Newtek Business Services has a beta of 1.19, indicating that its share price is 19% more volatile than the S&P 500. Comparatively, Loyalty Ventures has a beta of 2.87, indicating that its share price is 187% more volatile than the S&P 500.
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Insider & Institutional Ownership
14.9% of Newtek Business Services shares are owned by institutional investors. Comparatively, 64.0% of Loyalty Ventures shares are owned by institutional investors. 5.7% of Newtek Business Services shares are owned by company insiders. Comparatively, 0.2% of Loyalty Ventures shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
Earnings and Valuation
This table compares Newtek Business Services and Loyalty Ventures' top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
| Newtek Business Services | $108.49 million | 4.18 | $84.14 million | $2.27 | 8.18 |
| Loyalty Ventures | $735.31 million | 0.07 | -$2.34 million | ($20.19) | -0.10 |
Newtek Business Services has higher earnings, but lower revenue than Loyalty Ventures. Loyalty Ventures is trading at a lower price-to-earnings ratio than Newtek Business Services, indicating that it is currently the more affordable of the two stocks.
Analyst Ratings
This is a breakdown of current recommendations and price targets for Newtek Business Services and Loyalty Ventures, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
| Newtek Business Services | 0 | 1 | 0 | 0 | 2.00 |
| Loyalty Ventures | 0 | 1 | 1 | 0 | 2.50 |
Newtek Business Services presently has a consensus target price of $22.00, indicating a potential upside of 18.47%. Loyalty Ventures has a consensus target price of $3.00, indicating a potential upside of 42.86%. Given Loyalty Ventures' stronger consensus rating and higher possible upside, analysts plainly believe Loyalty Ventures is more favorable than Newtek Business Services.
Profitability
This table compares Newtek Business Services and Loyalty Ventures' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
| Newtek Business Services | 89.36% | 16.70% | 6.47% |
| Loyalty Ventures | -68.27% | 8.58% | -0.26% |
Summary
Newtek Business Services beats Loyalty Ventures on 8 of the 14 factors compared between the two stocks.
About Newtek Business Services
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Newtek Business Services Corp. is a business development company specializing in providing financial and business services to the small-and medium-sized business market in the United States. The firm also seeks to invest in early stage businesses. The firm seeks to makes both debt and equity investments. Under debt investments, it focuses on first lien loans, which have terms of 1 to 25 years; second lien loans, which have terms of 5 to 25 years, and unsecured loans, which are provided to meet short-term funding needs and are repaid within 6 to 12 months. It operates through Electronic Payment Processing, Managed Technology Solutions, Small Business Finance, and Capcos segments. The company originates small business administration loans for the purpose of acquiring commercial real estate, machinery, equipment, and inventory, as well as to refinance debt and fund franchises, working capital, and business acquisitions; and offers small business loan servicing and consulting services to the Federal Deposit Insurance Corporation and various other financial institutions, as well as provides management services. Its electronic payment processing services include credit and debit card processing, check approval, ancillary processing equipment and software to merchants, eCommerce, electronic solutions to accept non-cash payments, check conversion, remote deposit capture, ACH processing, and electronic gift and loyalty card programs. The company also provides Website hosting, dedicated server, and cloud hosting services; Web design and development; Internet marketing; data storage and backup and other related services; and ecommerce services, such as payment processing, online shopping cart tools, Website design and Web related services; Accounts Receivable Financing, and The Secure Gateway. In addition, it offers Newtek Advantage, a mobile, real-time operating platform enabling a business to access data on a smartphone, tablet, laptop, or PC for eCommerce, credit/debit transactions, Website statistics, payroll, insurance, and business loans. Further, the company sells personal, commercial, and health/benefits lines of insurance products; and payroll management processing and employee tax filing services. It has strategic alliances with American International Group, CTAA, Navy Federal Credit Union, Credit Union National Association, Pershing, and others to provide agent services to small business clients. The firm seeks to invest in New York and Louisiana area. The firm seeks to invest $0.3 million to $3 million in businesses. It provides small business terms loans ranging from $0.05 million to $10 million. The firm also provides account receivable financing ranging from $0.05 million to $1.5 million. It also provides $0.05 million to $10 million financing to owner occupied real estate businesses whose average net income over the last 2 years must not exceed $2.5 million. Newtek Business Services Corp.,was founded in 1998 and converted to a BDC company in 2014 and is headquartered in Boca Raton, Florida with additional offices in Lake Success, New York, Garden City, New York; Miami, Florida; Milwaukee, Wisconsin; New Orleans, Louisiana; and New York, New York.
About Loyalty Ventures
(Get Rating)
Loyalty Ventures Inc. provides consumer loyalty solutions. The company owns and operates the AIR MILES Reward Program, an end-to-end loyalty platform; and BrandLoyalty, a campaign-based loyalty solution for grocers and other high-frequency retailers. It also offers marketing, customer, and rewards and redemption management services for sponsors. The company helps financial services providers, retailers, and other consumer-facing businesses to create and increase customer loyalty across various touchpoints. Loyalty Ventures Inc. was incorporated in 2021 and is based in Plano, Texas.
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