Moody’s (NYSE:MCO – Get Free Report) and Burford Capital (NYSE:BUR – Get Free Report) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their risk, institutional ownership, analyst recommendations, earnings, profitability, valuation and dividends.
Risk & Volatility
Moody’s has a beta of 1.4, indicating that its share price is 40% more volatile than the S&P 500. Comparatively, Burford Capital has a beta of 0.56, indicating that its share price is 44% less volatile than the S&P 500.
Analyst Ratings
This is a breakdown of current ratings and target prices for Moody’s and Burford Capital, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Moody’s | 0 | 6 | 12 | 1 | 2.74 |
| Burford Capital | 0 | 1 | 1 | 1 | 3.00 |
Dividends
Moody’s pays an annual dividend of $3.76 per share and has a dividend yield of 0.8%. Burford Capital pays an annual dividend of $0.12 per share and has a dividend yield of 1.3%. Moody’s pays out 30.2% of its earnings in the form of a dividend. Burford Capital pays out 31.6% 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. Moody’s has increased its dividend for 16 consecutive years.
Institutional and Insider Ownership
92.1% of Moody’s shares are held by institutional investors. 0.1% of Moody’s shares are held by insiders. Comparatively, 8.9% of Burford Capital shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Valuation and Earnings
This table compares Moody’s and Burford Capital”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Moody’s | $7.50 billion | 11.60 | $2.06 billion | $12.44 | 39.21 |
| Burford Capital | $444.57 million | 4.39 | $146.48 million | $0.38 | 23.46 |
Moody’s has higher revenue and earnings than Burford Capital. Burford Capital is trading at a lower price-to-earnings ratio than Moody’s, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Moody’s and Burford Capital’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Moody’s | 29.92% | 63.58% | 16.34% |
| Burford Capital | 37.08% | 7.48% | 3.88% |
Summary
Moody’s beats Burford Capital on 12 of the 17 factors compared between the two stocks.
About Moody’s
Moody’s Corporation operates as an integrated risk assessment firm worldwide. It operates in two segments, Moody’s Analytics and Moody’s Investors Services. The Moody’s Analytics segment develops a range of products and services that support the risk management activities of institutional participants in financial markets. It also offers credit research, credit models and analytics, economics data and models, and structured finance solutions; data sets on companies and securities; and SaaS solutions supporting banking, insurance, and know your customer workflows. The Moody’s Investors Service segment publishes credit ratings and provides assessment services on various debt obligations, programs and facilities, and entities that issue such obligations, such as various corporate, financial institution, and governmental obligations, as well as structured finance securities. The company was formerly known as Dun and Bradstreet Company and changed its name to Moody’s Corporation in September 2000. Moody’s Corporation was founded in 1900 and is headquartered 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.
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