Critical Survey: FirstCash (NASDAQ:FCFS) & Capital One Financial (NYSE:COF)

FirstCash (NASDAQ:FCFS) and Capital One Financial (NYSE:COF) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, dividends, earnings, institutional ownership, risk and profitability.

Volatility and Risk

FirstCash has a beta of 0.55, suggesting that its stock price is 45% less volatile than the S&P 500. Comparatively, Capital One Financial has a beta of 1.04, suggesting that its stock price is 4% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings for FirstCash and Capital One Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
FirstCash	0	1	5	0	2.83
Capital One Financial	0	5	20	0	2.80

FirstCash currently has a consensus price target of $249.75, suggesting a potential upside of 14.13%. Capital One Financial has a consensus price target of $255.04, suggesting a potential upside of 28.84%. Given Capital One Financial’s higher possible upside, analysts clearly believe Capital One Financial is more favorable than FirstCash.

Earnings & Valuation

This table compares FirstCash and Capital One Financial”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
FirstCash	$3.66 billion	2.59	$330.38 million	$8.76	24.98
Capital One Financial	$69.25 billion	1.75	$2.45 billion	$16.16	12.25

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

Dividends

FirstCash pays an annual dividend of $1.68 per share and has a dividend yield of 0.8%. Capital One Financial pays an annual dividend of $3.20 per share and has a dividend yield of 1.6%. FirstCash pays out 19.2% of its earnings in the form of a dividend. Capital One Financial pays out 19.8% 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. FirstCash has increased its dividend for 8 consecutive years.

Insider and Institutional Ownership

80.3% of FirstCash shares are held by institutional investors. Comparatively, 89.8% of Capital One Financial shares are held by institutional investors. 2.9% of FirstCash shares are held by company insiders. Comparatively, 0.8% of Capital One Financial 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.

Profitability

This table compares FirstCash and Capital One Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
FirstCash	9.42%	19.65%	8.38%
Capital One Financial	13.37%	11.28%	1.90%

Summary

Capital One Financial beats FirstCash on 9 of the 17 factors compared between the two stocks.

About FirstCash

FirstCash Holdings, Inc, together with its subsidiaries, operates retail pawn stores in the United States, Mexico, and rest of Latin America. The company operates in three segments: U.S. Pawn, Latin America Pawn, and Retail POS Payment Solutions segments. Its pawn stores lend money on the collateral of pledged personal property, including jewelry, electronics, tools, appliances, sporting goods, and musical instruments; and retails merchandise acquired through collateral forfeitures on forfeited pawn loans and over-the-counter purchases of merchandise directly from customers. The company also provides retail POS payment solutions, which focuses on LTO products and facilitating other retail financing payment options across the network of traditional and e-commerce merchant partners. It serves cash and credit-constrained consumers. The company was formerly known as FirstCash, Inc and changed its name to FirstCash Holdings, Inc. in December 2021. FirstCash Holdings, Inc was incorporated in 1988 and is headquartered in Fort Worth, Texas.

About Capital One Financial

Capital One Financial Corporation operates as the financial services holding company for the Capital One, National Association, which engages in the provision of various financial products and services in the United States, Canada, and the United Kingdom. It operates through three segments: Credit Card, Consumer Banking, and Commercial Banking. The company accepts checking accounts, money market deposits, negotiable order of withdrawals, savings deposits, and time deposits. Its loan products include credit card loans; auto and retail banking loans; and commercial and multifamily real estate, and commercial and industrial loans. The company also offers credit and debit card products; online direct banking services; and provides advisory, capital markets, treasury management, and depository services. It serves consumers, small businesses, and commercial clients through digital channels, branches, cafés, and other distribution channels located in New York, Louisiana, Texas, Maryland, Virginia, New Jersey, and California. The company was founded in 1988 and is headquartered in McLean, Virginia.