Critical Survey: Vroom (NASDAQ:VRM) versus Lendingclub (NASDAQ:HAPN)

Lendingclub (NASDAQ:HAPN) and Vroom (NASDAQ:VRM) are both small-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their profitability, institutional ownership, earnings, risk, valuation, analyst recommendations and dividends.

Valuation & Earnings

This table compares Lendingclub and Vroom”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lendingclub	$998.85 million	1.87	$135.68 million	$1.66	9.73
Vroom	$178.83 million	0.28	-$7.96 million	($11.12)	-0.86

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

Volatility & Risk

Lendingclub has a beta of 1.86, meaning that its stock price is 86% more volatile than the S&P 500. Comparatively, Vroom has a beta of 1.31, meaning that its stock price is 31% more volatile than the S&P 500.

Profitability

This table compares Lendingclub and Vroom’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Lendingclub	18.67%	12.92%	1.66%
Vroom	-32.38%	-47.65%	-5.59%

Analyst Ratings

This is a summary of current ratings and recommmendations for Lendingclub and Vroom, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lendingclub	0	1	2	0	2.67
Vroom	1	0	0	0	1.00

Lendingclub presently has a consensus target price of $25.00, suggesting a potential upside of 54.73%. Given Lendingclub’s stronger consensus rating and higher probable upside, equities analysts plainly believe Lendingclub is more favorable than Vroom.

Institutional & Insider Ownership

74.1% of Lendingclub shares are owned by institutional investors. Comparatively, 25.8% of Vroom shares are owned by institutional investors. 3.3% of Lendingclub shares are owned by company insiders. Comparatively, 2.9% of Vroom shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Summary

Lendingclub beats Vroom on 14 of the 14 factors compared between the two stocks.

About Lendingclub

LendingClub Corporation, operates as a bank holding company for LendingClub Bank, National Association that provides range of financial products and services through a technology-driven platform in the United States. The company provides commercial and industrial, commercial real estate, small business, and equipment loans, as well as leases equipment; and unsecured personal and auto, patient finance, and education finance loans. It also operates an online lending marketplace platform that connects borrowers and investors. LendingClub Corporation was incorporated in 2006 and is headquartered in San Francisco, California.

About Vroom

Vroom, Inc. operates as an automotive finance company. The company offers vehicle financing to its customers through third party dealers under the UACC brand. It also provides artificial intelligence powered analytics and digital services to dealers, automotive financial services companies, and others in the automotive industry for automotive retail. The company was formerly known as Auto America, Inc. and changed its name to Vroom, Inc. in July 2015. Vroom, Inc. was incorporated in 2012 and is based in Houston, Texas.