Financial Analysis: Live Oak Bancshares (NYSE:LOB) and Toronto Dominion Bank (NYSE:TD)

Toronto Dominion Bank (NYSE:TD) and Live Oak Bancshares (NYSE:LOB) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, profitability, dividends and earnings.

Profitability

This table compares Toronto Dominion Bank and Live Oak Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Toronto Dominion Bank	14.41%	14.88%	0.81%
Live Oak Bancshares	12.22%	11.56%	0.89%

Volatility & Risk

Toronto Dominion Bank has a beta of 0.75, suggesting that its share price is 25% less volatile than the S&P 500. Comparatively, Live Oak Bancshares has a beta of 1.79, suggesting that its share price is 79% more volatile than the S&P 500.

Insider & Institutional Ownership

52.4% of Toronto Dominion Bank shares are owned by institutional investors. Comparatively, 64.0% of Live Oak Bancshares shares are owned by institutional investors. 0.1% of Toronto Dominion Bank shares are owned by insiders. Comparatively, 22.4% of Live Oak Bancshares shares are owned 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.

Dividends

Toronto Dominion Bank pays an annual dividend of $3.14 per share and has a dividend yield of 2.5%. Live Oak Bancshares pays an annual dividend of $0.12 per share and has a dividend yield of 0.3%. Toronto Dominion Bank pays out 46.7% of its earnings in the form of a dividend. Live Oak Bancshares pays out 4.3% 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. Toronto Dominion Bank has increased its dividend for 12 consecutive years. Toronto Dominion Bank is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Toronto Dominion Bank and Live Oak Bancshares, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Toronto Dominion Bank	0	4	3	2	2.78
Live Oak Bancshares	0	4	2	0	2.33

Toronto Dominion Bank presently has a consensus target price of $148.00, suggesting a potential upside of 18.66%. Live Oak Bancshares has a consensus target price of $41.75, suggesting a potential upside of 21.34%. Given Live Oak Bancshares’ higher probable upside, analysts plainly believe Live Oak Bancshares is more favorable than Toronto Dominion Bank.

Valuation and Earnings

This table compares Toronto Dominion Bank and Live Oak Bancshares”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Toronto Dominion Bank	$65.07 billion	3.12	$14.66 billion	$6.73	18.53
Live Oak Bancshares	$594.23 million	2.68	$105.87 million	$2.81	12.24

Toronto Dominion Bank has higher revenue and earnings than Live Oak Bancshares. Live Oak Bancshares is trading at a lower price-to-earnings ratio than Toronto Dominion Bank, indicating that it is currently the more affordable of the two stocks.

Summary

Toronto Dominion Bank beats Live Oak Bancshares on 12 of the 18 factors compared between the two stocks.

About Toronto Dominion Bank

The Toronto-Dominion Bank, together with its subsidiaries, provides various financial products and services in Canada, the United States, and internationally. It operates through four segments: Canadian Personal and Commercial Banking, U.S. Retail, Wealth Management and Insurance, and Wholesale Banking. The company offers personal deposits, such as chequing, savings, and investment products; financing, investment, cash management, international trade, and day-to-day banking services to businesses; and financing options to customers at point of sale for automotive and recreational vehicle purchases. It also provides credit cards and payments; real estate secured lending, auto finance, and consumer lending services; point-of-sale payment solutions for large and small businesses; wealth and asset management products, and advice to retail and institutional clients through direct investing, advice-based, and asset management businesses; and property and casualty insurance, as well as life and health insurance products. The company also provides capital markets, and corporate and investment banking products and services, including underwriting and distribution of new debt and equity issues; advice on strategic acquisitions and divestitures; and trading, funding, and investment services to corporations, governments, and institutions. It offers its products and services under the TD Bank and America's Most Convenient Bank brand names. The Toronto-Dominion Bank was founded in 1855 and is headquartered in Toronto, Canada.

About Live Oak Bancshares

Live Oak Bancshares, Inc. operates as the bank holding company for Live Oak Banking Company that provides various commercial banking products and services to individuals, small businesses, and professionals in North Carolina, the United States. The company accepts various deposit products, including noninterest-bearing demand, as well as interest-bearing checking, money market, savings, and time deposits. It also offers commercial and industrial loans; construction and development loans; owner occupied and non-owner occupied collateral commercial real estate loans; and commercial land loans. In addition, the company provides settlement, accounting, and securitization services for government guaranteed loans; wealth and investment management services to high-net-worth individuals and families; investment advisory services to a series of funds focused on providing venture capital to new and emerging financial technology companies; and an on-site restaurant location to company employees and business visitors. Live Oak Bancshares, Inc. was incorporated in 2008 and is headquartered in Wilmington, North Carolina.