Critical Analysis: Burford Capital (OTCMKTS:BRFRF) and Heritage Global (NASDAQ:HGBL)

Heritage Global (NASDAQ:HGBL) and Burford Capital (OTCMKTS:BRFRF) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their risk, analyst recommendations, valuation, profitability, dividends, earnings and institutional ownership.

Valuation and Earnings

This table compares Heritage Global and Burford Capital”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Heritage Global	$50.98 million	0.78	$3.59 million	($0.41)	-2.80
Burford Capital	N/A	N/A	N/A	N/A	N/A

Heritage Global has higher revenue and earnings than Burford Capital.

Profitability

This table compares Heritage Global and Burford Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Heritage Global	-29.63%	6.12%	4.69%
Burford Capital	N/A	N/A	N/A

Analyst Ratings

This is a summary of recent recommendations and price targets for Heritage Global and Burford Capital, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Heritage Global	1	1	1	1	2.50
Burford Capital	0	0	0	0	0.00

Heritage Global currently has a consensus target price of $3.00, suggesting a potential upside of 160.87%. Given Heritage Global’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Heritage Global is more favorable than Burford Capital.

Institutional & Insider Ownership

33.5% of Heritage Global shares are held by institutional investors. 15.6% of Heritage Global shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Heritage Global beats Burford Capital on 9 of the 10 factors compared between the two stocks.

About Heritage Global

Heritage Global Inc., together with its subsidiaries, operates as an asset services company with focus on financial and industrial asset transactions. The company operates in three segments: Auction and Liquidation, Refurbishment & Resale, and Brokerage. It provides a suite of market making, acquisitions, refurbishment, dispositions, valuations, and secured lending services. The company focuses on identifying, valuing, acquiring, and monetizing underlying tangible assets. It acts as an adviser, as well as a principal, acquiring, or brokering manufacturing facilities; surplus industrial machinery and equipment; industrial inventories; and charged-off receivable portfolios. The company was formerly known as Counsel RB Capital Inc. and changed its name to Heritage Global, Inc. in August 2013. Heritage Global, Inc. was founded in 1937 and is headquartered in San Diego, 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.