Nielsen (NYSE:NLSN) and NEWTEK Business Services (NEWT) Critical Review

NEWTEK Business Services (NASDAQ:NEWT) and Nielsen (NYSE:NLSN) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, profitability, valuation, institutional ownership, dividends, risk and analyst recommendations.

Dividends

NEWTEK Business Services pays an annual dividend of $2.00 per share and has a dividend yield of 10.6%. Nielsen pays an annual dividend of $1.40 per share and has a dividend yield of 5.5%. NEWTEK Business Services pays out 113.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Nielsen pays out 66.4% of its earnings in the form of a dividend. NEWTEK Business Services has increased its dividend for 3 consecutive years and Nielsen has increased its dividend for 5 consecutive years.

Profitability

This table compares NEWTEK Business Services and Nielsen’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NEWTEK Business Services 102.01% 8.51% 4.24%
Nielsen 4.85% 14.56% 3.76%

Earnings & Valuation

This table compares NEWTEK Business Services and Nielsen’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
NEWTEK Business Services $38.91 million 9.17 $38.97 million $1.77 10.67
Nielsen $6.57 billion 1.39 $429.00 million $2.11 12.17

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

Institutional and Insider Ownership

20.7% of NEWTEK Business Services shares are held by institutional investors. Comparatively, 95.6% of Nielsen shares are held by institutional investors. 6.3% of NEWTEK Business Services shares are held by insiders. Comparatively, 0.4% of Nielsen shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Volatility and Risk

NEWTEK Business Services has a beta of 1.43, meaning that its share price is 43% more volatile than the S&P 500. Comparatively, Nielsen has a beta of 0.93, meaning that its share price is 7% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for NEWTEK Business Services and Nielsen, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NEWTEK Business Services 0 2 2 0 2.50
Nielsen 0 6 6 0 2.50

NEWTEK Business Services presently has a consensus price target of $18.17, suggesting a potential downside of 3.76%. Nielsen has a consensus price target of $28.42, suggesting a potential upside of 10.66%. Given Nielsen’s higher probable upside, analysts plainly believe Nielsen is more favorable than NEWTEK Business Services.

Summary

Nielsen beats NEWTEK Business Services on 10 of the 16 factors compared between the two stocks.

About NEWTEK Business Services

Newtek Business Services Corp. is a business development company specializing in providing financial and business services to the small-and medium-sized business market in the United States. The firm also seeks to invest in early stage businesses. The firm seeks to makes both debt and equity investments. Under debt investments, it focuses on first lien loans, which have terms of 1 to 25 years; second lien loans, which have terms of 5 to 25 years, and unsecured loans, which are provided to meet short-term funding needs and are repaid within 6 to 12 months. It operates through Electronic Payment Processing, Managed Technology Solutions, Small Business Finance, and Capcos segments. The company originates small business administration loans for the purpose of acquiring commercial real estate, machinery, equipment, and inventory, as well as to refinance debt and fund franchises, working capital, and business acquisitions; and offers small business loan servicing and consulting services to the Federal Deposit Insurance Corporation and various other financial institutions, as well as provides management services. Its electronic payment processing services include credit and debit card processing, check approval, ancillary processing equipment and software to merchants, eCommerce, electronic solutions to accept non-cash payments, check conversion, remote deposit capture, ACH processing, and electronic gift and loyalty card programs. The company also provides Website hosting, dedicated server, and cloud hosting services; Web design and development; Internet marketing; data storage and backup and other related services; and ecommerce services, such as payment processing, online shopping cart tools, Website design and Web related services; Accounts Receivable Financing, and The Secure Gateway. In addition, it offers Newtek Advantage, a mobile, real-time operating platform enabling a business to access data on a smartphone, tablet, laptop, or PC for eCommerce, credit/debit transactions, Website statistics, payroll, insurance, and business loans. Further, the company sells personal, commercial, and health/benefits lines of insurance products; and payroll management processing and employee tax filing services. It has strategic alliances with American International Group, CTAA, Navy Federal Credit Union, Credit Union National Association, Pershing, and others to provide agent services to small business clients. The firm seeks to invest in New York and Louisiana area. The firm seeks to invest $0.3 million to $3 million in businesses. It provides small business terms loans ranging from $0.05 million to $10 million. The firm also provides account receivable financing ranging from $0.05 million to $1.5 million. It also provides $0.05 million to $10 million financing to owner occupied real estate businesses whose average net income over the last 2 years must not exceed $2.5 million. Newtek Business Services Corp., formerly known as Newtek Business Services Inc., was incorporated on August 26, 2013 and is headquartered in Lake Success, New York with additional offices in Garden City, New York; Miami, Florida; Milwaukee, Wisconsin; New Orleans, Louisiana; and New York, New York.

About Nielsen

Nielsen Holdings plc, together with its subsidiaries, operates as an information and measurement company. It operates through Buy and Watch segments. The company provides media and marketing information, analytics, and manufacturer and retailer expertise about what and where consumers buy, read, watch, and listen. The Buy segment provides retail transactional measurement data, consumer behavior information, and analytics primarily to businesses in the consumer packaged goods industry. This segment provides data on retail measurement services, such as market share and competitive sales volumes; insights into distribution, pricing, merchandising, and promotion; consumer panel measurement, which offers insight into shopper behavior and customer segmentation; and consumer intelligence and analytical services for decision making in product development and marketing cycles. The Watch segment provides viewership and listening data, and analytics primarily to the media and advertising industries for television, radio, print, online, and mobile viewing, and listening platforms. This segment offers television audience measurement services; audio audience measurement services; digital audience measurement services, such as digital media and market research, audience analytics, and social media measurement; mobile measurement services comprising measurement and consumer research for telecom and media companies; and total audience measurement services, as well as advertising solutions. The company was formerly known as Nielsen N.V. and changed its name to Nielsen Holdings plc in August 2015. Nielsen Holdings plc has a strategic alliance with Microsoft Corporation to develop solutions for the fast-moving consumer goods and retail companies. The company was founded in 1923 and is headquartered in New York, New York.

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