Arlington Asset Investment Corp (AI) & Marlin Business Services Corp. (MRLN) Head-To-Head Review

Marlin Business Services Corp. (NASDAQ: MRLN) and Arlington Asset Investment Corp (NYSE:AI) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, risk, earnings, profitabiliy, valuation, dividends and institutional ownership.

Dividends

Marlin Business Services Corp. pays an annual dividend of $0.56 per share and has a dividend yield of 2.2%. Arlington Asset Investment Corp pays an annual dividend of $2.50 per share and has a dividend yield of 16.9%. Marlin Business Services Corp. pays out 46.3% of its earnings in the form of a dividend. Arlington Asset Investment Corp pays out -1,250.0% 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. Arlington Asset Investment Corp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of current ratings and target prices for Marlin Business Services Corp. and Arlington Asset Investment Corp, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Marlin Business Services Corp. 0 0 1 0 3.00
Arlington Asset Investment Corp 0 2 1 0 2.33

Marlin Business Services Corp. presently has a consensus price target of $29.00, indicating a potential upside of 15.08%. Arlington Asset Investment Corp has a consensus price target of $16.00, indicating a potential upside of 7.96%. Given Marlin Business Services Corp.’s stronger consensus rating and higher probable upside, equities analysts plainly believe Marlin Business Services Corp. is more favorable than Arlington Asset Investment Corp.

Risk and Volatility

Marlin Business Services Corp. has a beta of 1.35, suggesting that its stock price is 35% more volatile than the S&P 500. Comparatively, Arlington Asset Investment Corp has a beta of 1.12, suggesting that its stock price is 12% more volatile than the S&P 500.

Profitability

This table compares Marlin Business Services Corp. and Arlington Asset Investment Corp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Marlin Business Services Corp. 15.07% 11.19% 2.02%
Arlington Asset Investment Corp -4.51% -1.78% -0.17%

Valuation & Earnings

This table compares Marlin Business Services Corp. and Arlington Asset Investment Corp’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Marlin Business Services Corp. $82.73 million 3.74 $14.84 million $1.21 20.83
Arlington Asset Investment Corp $53.14 million 6.59 -$4.73 million ($0.20) -74.10

Marlin Business Services Corp. has higher revenue and earnings than Arlington Asset Investment Corp. Arlington Asset Investment Corp is trading at a lower price-to-earnings ratio than Marlin Business Services Corp., indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

77.9% of Marlin Business Services Corp. shares are owned by institutional investors. Comparatively, 42.7% of Arlington Asset Investment Corp shares are owned by institutional investors. 10.7% of Marlin Business Services Corp. shares are owned by insiders. Comparatively, 2.7% of Arlington Asset Investment Corp shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

Marlin Business Services Corp. beats Arlington Asset Investment Corp on 11 of the 14 factors compared between the two stocks.

Marlin Business Services Corp. Company Profile

Marlin Business Services Corp. is a bank holding company and a financial holding company. The Company is a provider of credit products and services to small businesses. The Company provides products and services to its customers, which include loans and leases for the acquisition of commercial equipment, working capital loans, and insurance products. The Company accesses its end user customers primarily through origination sources consisting of independent commercial equipment dealers, various national account programs, through direct solicitation of its end user customers, and through relationships with select lease and loan brokers. The Company uses both a telephonic direct sales model and, for strategic larger accounts, outside sales executives to market to its origination sources and end user customers. Through these origination sources, the Company accesses end user customers while also helping its origination sources obtain financing for their customers.

Arlington Asset Investment Corp Company Profile

Arlington Asset Investment Corp. is an investment company. The Company focuses on acquiring and holding a levered portfolio of residential mortgage-backed securities (MBS), consisting of agency MBS and private-label MBS. Agency MBS include residential mortgage pass-through certificates for which the principal and interest payments are guaranteed by a United States Government agency or government-sponsored enterprise (GSE), such as the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). Private-label MBS, or non-agency MBS, include residential MBS that are not guaranteed by a GSE or the United States Government. The Company funds its investments primarily through short-term financing arrangements. The Company purchases agency MBS either in initial offerings or in the secondary market through broker-dealers or similar entities. It may invest in agency MBS collateralized by adjustable-rate mortgage loans (ARMs) or hybrid ARMs.

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