Contrasting of Walker & Dunlop Inc. (WD) and Hercules Capital Inc. (NYSE:HTGC)

Walker & Dunlop Inc. (NYSE:WD) and Hercules Capital Inc. (NYSE:HTGC) compete against each other in the Mortgage Investment sector. We will compare them and contrast their profitability, analyst recommendations, risk, institutional ownership, dividends, earnings and valuation.

Earnings and Valuation

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Walker & Dunlop Inc. 749.67M 2.22 162.89M 5.04 10.85
Hercules Capital Inc. 217.85M 5.91 131.59M 0.83 16.23

In table 1 we can see Walker & Dunlop Inc. and Hercules Capital Inc.’s top-line revenue, earnings per share (EPS) and valuation. Hercules Capital Inc. appears to has lower revenue and earnings than Walker & Dunlop Inc. The company that is more affordable between the two has a lower P/E ratio. Walker & Dunlop Inc. is currently more affordable than Hercules Capital Inc., because it’s trading at a lower P/E ratio.

Profitability

Table 2 has Walker & Dunlop Inc. and Hercules Capital Inc.’s return on assets, return on equity and net margins.

Net Margins Return on Equity Return on Assets
Walker & Dunlop Inc. 21.73% 24.8% 8.1%
Hercules Capital Inc. 60.40% 0% 0%

Dividends

Walker & Dunlop Inc. shareholders receive an annual dividend of $1.05 per share which is subject to 1.95% dividend yield. Hercules Capital Inc. also pays out annual dividends at $1.24 per share and at a 9.44% dividend yield.

Analyst Ratings

Walker & Dunlop Inc. and Hercules Capital Inc. Recommendations and Ratings are available in the next table.

Sell Ratings Hold Ratings Buy Ratings Rating Score
Walker & Dunlop Inc. 0 0 2 3.00
Hercules Capital Inc. 0 1 1 2.50

$67.5 is Walker & Dunlop Inc.’s average price target while its potential upside is 24.79%. Competitively Hercules Capital Inc. has a consensus price target of $13.25, with potential downside of -0.23%. The results from earlier shows that analysts opinion suggest that Walker & Dunlop Inc. seems more appealing than Hercules Capital Inc.

Institutional & Insider Ownership

Roughly 79% of Walker & Dunlop Inc. shares are held by institutional investors while 37.6% of Hercules Capital Inc. are owned by institutional investors. 6.1% are Walker & Dunlop Inc.’s share held by insiders. Comparatively, insiders own roughly 3.48% of Hercules Capital Inc.’s shares.

Performance

In this table we provide the Weekly, Monthly, Quarterly, Half Yearly, Yearly and YTD Performance of both pretenders.

Performance (W) Performance (M) Performance (Q) Performance (HY) Performance (Y) Performance (YTD)
Walker & Dunlop Inc. -3.93% 13.83% 15.74% 2.07% 13.08% 26.52%
Hercules Capital Inc. -4.06% 2.51% 9.78% 0.01% 13.47% 21.9%

For the past year Walker & Dunlop Inc. has stronger performance than Hercules Capital Inc.

Summary

Walker & Dunlop Inc. beats on 10 of the 16 factors Hercules Capital Inc.

Walker & Dunlop, Inc., through its subsidiaries, originates, sells, and services a range of multifamily and other commercial real estate financing products for owners and developers of real estate in the United States. The company offers a range of commercial real estate finance products, including first mortgage, second trust, construction, mezzanine, and bridge/interim loans, as well as supplemental financings through the programs of the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Government National Mortgage Association, and the Federal Housing Administration. It also provides multifamily finance for multifamily, manufactured housing communities, student housing, affordable, and housing properties under the Fannie Mae DUS program; and FHA finance, such as construction and permanent loans to developers and owners of multifamily housing, affordable housing, senior housing, and healthcare facilities. In addition, the company acts as an intermediary in the placement of commercial real estate debt between institutional sources of capital, including life insurance companies, investment banks, commercial banks, pension funds, commercial mortgage backed securities (CMBS) issuers, and other institutional investors, as well as owners of various types of commercial real estate. Further, it advises on capital structure; develops the financing package; facilitates negotiations between its client and institutional sources of capital; coordinates due diligence; and assists in closing the transaction, as well as offers interim loans and CMBS products, and investment sales brokerage services. Walker & Dunlop, Inc. was founded in 1937 and is headquartered in Bethesda, Maryland.

Hercules Capital, Inc., formerly known as Hercules Technology Growth Capital, Inc., is a business development company specializing in providing venture debt, debt, senior secured loans, and growth capital to privately held venture capital-backed companies at all stages of development including select publicly listed companies and select special opportunity lower middle market companies that require additional capital to fund acquisitions, recapitalizations and refinancings and established-stage companies. The firm provides growth capital financing solutions for capital extension; management buy-out and corporate spin-out financing solutions; company, asset specific, or intellectual property acquisition; convertible, subordinated and/or mezzanine loans; domestic and international expansion; vendor financing; revenue acceleration by sales and marketing development, and manufacturing expansion. It provides asset-based financing with a focus on cash flow; accounts receivable facilities; equipment loans/leases; equipment acquisition; facilities build-out and/or expansion; working capital revolving lines of credit; inventory. The firm also provides bridge financing to IPO or mergers and acquisitions or technology acquisition; dividend recapitalizations and other sources of investor liquidity; cash flow financing to protect against share price volatility; competitor acquisition; pre-IPO financing for extra cash on the balance sheet; public company financing to continue asset growth and production capacity; public company financing to continue asset growth and production capacity; short-term bridge financing; and strategic and intellectual property acquisition financings. It also focuses on customized financing solutions, seed and early stage financing. The firm invests primarily in structured debt with warrants and, to a lesser extent, in senior debt and equity investments. The firm generally seeks to invest in companies that have been operating for at least six to 12 months prior to the date of their investment. It prefers to invest in technology, energy technology, and life sciences. Within technology the firm focuses on advanced specialty materials and chemicals; communication and networking, consumer and business products; consumer products and services, digital media and consumer internet; electronics and computer hardware; enterprise software and services; healthcare services; information services; internet consumer and business services; media, content and information; mobile; resource management; security software; semiconductors; semiconductors and hardware; and software sector. Within energy technology, it invests in agriculture; clean technology; energy and renewable technology, fuels and power technology; geothermal; smart grid and energy efficiency and monitoring technologies; solar; and wind. Within life sciences, the firm invests in biopharmaceuticals; biotechnology tools; diagnostics; drug discovery, development and delivery; medical devices and equipment; surgical devices; therapeutics; pharma services; and specialty pharmaceuticals. It also invests in educational services. The firm invests primarily in United States based companies and considers investment in the West Coast, Mid-Atlantic regions, Southeast and Midwest; particularly in the areas of software, biotech and information services. It invests generally between $1 million to $40 million in companies with revenues of $10 million to $200 million, generating EBITDA of $2 million to $15 million, focused primarily on business services, communications, electronics, hardware, and healthcare services. The firm invests primarily in private companies but also have investments in public companies. For equity investments, the firm seeks to represent a controlling interest in its portfolio companies which may exceed 25% of the voting securities of such companies. The firm seeks to invest a limited portion of its assets in equipment-based loans to early-stage prospective portfolio companies. These loans are generally for amounts up to $3.0 million but may be up to $15.0 million for certain energy technology venture investments. The firm allows certain debt investments have the right to convert a portion of the debt investment into equity. It also co-invests with other private equity firms. The firm seeks to exit its investments through initial public offering, a private sale of equity interest to a third party, a merger or an acquisition of the company or a purchase of the equity position by the company or one of its stockholders. The firm has structured debt with warrants which typically have maturities of between two and seven years with an average of three years; senior debt with an investment horizon of less than three years; equipment loans with an investment horizon ranging from three to four years; and equity related securities with an investment horizon ranging from three to seven years. Hercules Capital, Inc. was founded in December 2003 and is based in Palo Alto, California with additional offices in North America.

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