Financial Contrast: Voya Financial (NYSE:VOYA) vs. Burford Capital (NYSE:BUR)

Voya Financial (NYSE:VOYA) and Burford Capital (NYSE:BUR) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, earnings, dividends, risk, institutional ownership, profitability and valuation.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Voya Financial	7.45%	12.31%	0.46%
Burford Capital	15.14%	10.24%	4.35%

Dividends

Voya Financial pays an annual dividend of $1.88 per share and has a dividend yield of 1.9%. Burford Capital pays an annual dividend of $0.12 per share and has a dividend yield of 2.9%. Voya Financial pays out 31.7% of its earnings in the form of a dividend. Burford Capital pays out -1.6% 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. Voya Financial has increased its dividend for 6 consecutive years. Burford Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Voya Financial and Burford Capital, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Voya Financial	1	3	8	1	2.69
Burford Capital	2	2	2	0	2.00

Voya Financial presently has a consensus target price of $103.85, indicating a potential upside of 6.17%. Burford Capital has a consensus target price of $9.33, indicating a potential upside of 127.37%. Given Burford Capital’s higher possible upside, analysts plainly believe Burford Capital is more favorable than Voya Financial.

Institutional & Insider Ownership

96.1% of Voya Financial shares are held by institutional investors. 1.6% of Voya Financial shares are held by insiders. Comparatively, 8.9% of Burford Capital shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Voya Financial and Burford Capital”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Voya Financial	$8.19 billion	1.08	$654.00 million	$5.93	16.49
Burford Capital	$413.36 million	2.18	$62.57 million	($7.71)	-0.53

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

Risk and Volatility

Voya Financial has a beta of 0.9, indicating that its stock price is 10% less volatile than the S&P 500. Comparatively, Burford Capital has a beta of 1.25, indicating that its stock price is 25% more volatile than the S&P 500.

Summary

Voya Financial beats Burford Capital on 10 of the 18 factors compared between the two stocks.

About Voya Financial

Voya Financial, Inc. engages in the provision of workplace benefits and savings products in the United States and internationally. The company operates through three segments: Wealth Solutions, Health Solutions, and Investment Management. The Wealth Solutions segment offers full-service retirement products; recordkeeping services; stable value and fixed general account investment products; non-qualified plan administration services; and tools, guidance, and services to promote the financial well-being and retirement security of employees. The segment also provides wealth management services, such as individual retirement, managed, and brokerage accounts, as well as financial guidance and advisory services. This segment serves corporate, public and private school systems, higher education institutions, hospitals and healthcare facilities, other non-profit organizations, and state and local governments, as well as institutional and individual customers. The Health Solutions segment offers various insurance products comprising stop loss, group life, group disability, whole life, critical illness, accident, and hospital indemnity insurance. The segment also provides worksite employee benefits, health account solutions, leave management, benefits administration, health plan enrollment, financial wellness, and decision support products and services to mid-size and large corporate employers and professional associations. The Investment Management segment provides fixed income, equity, multi-asset, and alternative products and solutions to individual investors and institutional clients through its direct sales force, consultant channel, banks, broker-dealers, and independent financial advisers. The company was formerly known as ING U.S., Inc. and changed its name to Voya Financial, Inc. in April 2014. Voya Financial, Inc. was founded in 1975 and is based 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.