Critical Analysis: Visa (NYSE:V) and UWM (NYSE:UWMC)

Visa (NYSE:V) and UWM (NYSE:UWMC) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, analyst recommendations, dividends, risk, earnings, valuation and institutional ownership.

Profitability

This table compares Visa and UWM’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Visa	51.20%	70.50%	26.59%
UWM	-1.04%	-6.20%	-0.50%

Earnings & Valuation

This table compares Visa and UWM”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Visa	$45.90 billion	16.08	$20.06 billion	$12.33	33.55
UWM	$3.16 billion	0.80	$27.38 million	($0.08)	-19.69

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

Insider & Institutional Ownership

82.2% of Visa shares are owned by institutional investors. Comparatively, 53.6% of UWM shares are owned by institutional investors. 0.1% of Visa shares are owned by insiders. Comparatively, 80.9% of UWM shares are owned by 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.

Risk & Volatility

Visa has a beta of 0.77, suggesting that its stock price is 23% less volatile than the S&P 500. Comparatively, UWM has a beta of 1.82, suggesting that its stock price is 82% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Visa and UWM, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Visa	0	0	35	2	3.05
UWM	1	9	4	0	2.21

Visa presently has a consensus target price of $438.41, suggesting a potential upside of 5.98%. UWM has a consensus target price of $2.76, suggesting a potential upside of 75.47%. Given UWM’s higher probable upside, analysts clearly believe UWM is more favorable than Visa.

Dividends

Visa pays an annual dividend of $3.12 per share and has a dividend yield of 0.8%. UWM pays an annual dividend of $0.40 per share and has a dividend yield of 25.4%. Visa pays out 25.3% of its earnings in the form of a dividend. UWM pays out -500.0% 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. Visa has raised its dividend for 17 consecutive years. UWM is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Visa beats UWM on 13 of the 18 factors compared between the two stocks.

About Visa

Visa Inc. operates as a payment technology company in the United States and internationally. The company operates VisaNet, a transaction processing network that enables authorization, clearing, and settlement of payment transactions. It also offers credit, debit, and prepaid card products; tap to pay, tokenization, and click to pay services; Visa Direct, a solution that facilitates the delivery of funds to eligible cards, deposit accounts, and digital wallets; Visa B2B Connect, a multilateral business-to-business cross-border payments network; Visa Cross-Border Solution, a cross-border consumer payments solution; and Visa DPS that provides a range of value-added services, including fraud mitigation, dispute management, data analytics, campaign management, a suite of digital solutions, and contact center services. The company also provides acceptance solutions, which include Cybersource that provides modular and value-added services for connecting merchants to payment processing; risk and identity solutions, such as Visa Advanced Authorization, Visa Secure, Visa Risk and Decision Manager, Visa Consumer Authentication Service, and payment-decisioning solutions for fraud prevention; and Visa Consulting and Analytics, a payment consulting advisory services. It provides its services under the Visa, Visa Electron, Interlink, V PAY, and PLUS brand names. The company serves merchants, financial institutions, and government entities. Visa Inc. was founded in 1958 and is headquartered in San Francisco, California.

About UWM

UWM Holdings Corporation engages in the residential mortgage lending business in the United States. The company offers mortgage loans through wholesale channel. It originates primarily conforming and government loans. UWM Holdings Corporation was founded in 1986 and is headquartered in Pontiac, Michigan.