Financial Analysis: Lendway (NASDAQ:LDWY) and Starco Brands (OTCMKTS:STCB)

Starco Brands (OTCMKTS:STCB) and Lendway (NASDAQ:LDWY) are both small-cap consumer discretionary companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, risk, earnings, analyst recommendations, dividends, institutional ownership and profitability.

Analyst Ratings

This is a breakdown of current ratings and target prices for Starco Brands and Lendway, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Starco Brands	0	0	0	0	N/A
Lendway	0	0	0	0	N/A

Profitability

This table compares Starco Brands and Lendway’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Starco Brands	-80.56%	-66.88%	-27.53%
Lendway	N/A	-23.31%	-6.41%

Insider & Institutional Ownership

6.6% of Lendway shares are held by institutional investors. 34.8% of Starco Brands shares are held by insiders. Comparatively, 13.2% of Lendway shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Starco Brands and Lendway”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Starco Brands	$65.21 million	0.63	-$46.19 million	($0.11)	-0.73
Lendway	$24.81 million	0.25	$2.41 million	($0.31)	-11.10

Lendway has lower revenue, but higher earnings than Starco Brands. Lendway is trading at a lower price-to-earnings ratio than Starco Brands, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Starco Brands has a beta of 0.88, meaning that its share price is 12% less volatile than the S&P 500. Comparatively, Lendway has a beta of 1.85, meaning that its share price is 85% more volatile than the S&P 500.

Summary

Lendway beats Starco Brands on 6 of the 11 factors compared between the two stocks.

About Starco Brands

Starco Brands, Inc. markets consumer products through retail and online in the United States. It offers products in various categories, including household cleaning, DIY/Hardware, paints, coatings and adhesives, household, hair care, disinfectants, automotive, motorcycle, arts and crafts, personal care cosmetics, personal care FDA, sun care, food, cooking oils, beverages, and spirits and wine under the Winona, Whipshots, Skylar, Soylent, and Art of Sport brands. The company was formerly known as Insynergy Products, Inc. and changed its name to Starco Brands, Inc. in September 2017. Starco Brands, Inc. was incorporated in 2010 and is based in Santa Monica, California.

About Lendway

Lendway, Inc. operates as a specialty agricultural and finance company focusing on making and managing its agricultural investments in the United States and internationally. It owns and operates FarmlandCredit.com, a non-bank lending business that seeks to purchase existing loans and/or originate and fund new loans domestically. The company was formerly known as Insignia Systems, Inc. and changed its name to Lendway, Inc. in August 2023. The company was incorporated in 1990 and is headquartered in Minneapolis, Minnesota.