In today's digital era, LendingTree, Inc. TREE and NerdWallet, Inc. NRDS compete for market share in the online lending space. Both companies offer tools to compare financial products like loans, credit cards and insurance.
While both companies’ focus is on a digital marketplace, they differ in strategy and product mix. Both face headwinds from shifting consumer spending patterns and market uncertainties. So, which of these two online lending stocks is better positioned for long-term growth? Let us take a closer look.
Case for NerdWallet
NRDS is more of an affiliate marketing provider. It produces massive volumes of personal finance advice, reviews and guides, monetizing through affiliate partnerships when readers click through and sign up for credit cards, loans or other financial products.
NedWallet has established a strong market position in the landscape of personal finances, offering valuable resources and tools to empower clients to make informed decisions. The company empowers both individuals and small and medium businesses (SMBs) to make smarter financial decisions with its digital platform.
The company’s NerdWallet application platform delivers unique value across many financial products, including credit cards, mortgages, insurance, SMB products, personal loans, banking, investing and student loans.
NRDS’s user base has grown substantially over the past year. Strategic collaborations with several financial institutions have expanded its reach and credibility. One recent milestone includes its October 2024 acquisition of Next Door Lending, a mortgage brokerage that enhances NerdWallet’s home financing offerings by connecting users with wholesale lenders.
NRDS User Base Growth
NerdWallet, Inc.
Image Source: NerdWallet, Inc.
Over the years, NRDS has expanded its reach in the U.K., Canada, and the Australia markets as an opportunity for growth. With a diversified revenue approach, NRDS is well-positioned for sustained growth in the future.
However, with rapid technological developments, NRDS needs to continue to evolve and update to cater to the ever-changing needs of the clients.
NerdWallet expects its 2025 adjusted EBITDA to be $106-$116 million compared with $108 million in 2024.
Case for LendingTree
TREE is an online marketplace that connects consumers with financial service providers, offering products such as mortgages, personal loans, credit cards and insurance. This business model enables the company to be a key intermediary in the digital lending market, taking advantage of the growing trend of online financial services.
LendingTree's financial strategy appears to be evolving, with a notable shift in focus toward boosting sales by diversifying its non-mortgage product offerings, particularly in the Consumer segment. Over the past years, the company has amplified its services, such as credit cards, and widened loan offerings to personal, auto, small business, and student loans. With the launch of the LendingTree WinCard in partnership with Upgrade in February 2023, the company provided its first branded consumer credit offering. LendingTree’s initiatives, including SPRING (previously MyLendingTree) and TreeQual, are likely to improve cross-selling opportunities.
The company intends to continue adding offerings for consumers, small businesses and network partners to its online marketplace to expand and diversify its revenue sources. This diversification has led to seeing a compound annual growth rate of 3.3% in non-mortgage revenue streams over the past three years.
LendingTree is leveraging data and technology to augment user experience and monetization. The company’s strategic investment in EarnUp (in early 2022), a consumer-facing payments platform, demonstrates its commitment to building a more comprehensive, tech-enabled ecosystem for financial health management.
TREE expects its 2025 adjusted EBITDA to be $116-$126 million, suggesting an increase of 11-21% from the 2024 reported level.
How Do Estimates Compare for NRDS & TREE?
The Zacks Consensus Estimate for NRDS’ 2025 sales and EPS implies year-over-year increases of 9.1% and 410%, respectively. EPS estimates have been unchanged at 31 cents over the past seven days. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Earnings Trend for NRDS
Zacks Investment Research
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for TREE’s 2025 sales and EPS suggests year-over-year growth of 11.9% and 20.7%, respectively. EPS estimates have been unchanged at $3.85 in the past seven days.
Earnings Trend for TREE
Zacks Investment Research
Image Source: Zacks Investment Research
Price Performance & Valuation of NRDS & TREE
Shares of LendingTree and NerdWallet have underperformed the industry in the past year. Despite the underperformance, TREE has seen modest gains, while NRDS shares have plunged significantly.
Price Performance
Zacks Investment Research
Image Source: Zacks Investment Research
From a valuation perspective, TREE is trading at a forward price-to-sales (P/S F12M) multiple of 0.69X, below its median of 0.74X in the last five years. NRDS’ forward P/S multiple sits at 0.88X, below its median of 1.35X in the last five years. Both stocks are trading at a discount compared with the industry’s P/S multiple of 4.80X. But TREE is trading at a discount to NRDS.
Price-to-Sales F12M
Zacks Investment Research
Image Source: Zacks Investment Research
Final Thoughts on NRDS & TREE
NerdWallet offers a scalable, content-driven online platform with strong partner credibility and growing international exposure. Its diversified product base and affiliate model provide earnings stability.
Conversely, LendingTree is a more lead-driven marketplace with a strong technology focus and aggressive product expansion. It is better positioned for monetizing user data and enhancing consumer engagement through its in-house tools and partnerships. Also, in terms of performance and valuation, LendingTree looks more attractive than NerdWallet.
Hence, investors looking for long-term stability can consider parking their cash in the LendingTree stock at the current levels.
TREE currently flaunts a Zacks Rank #1(Strong Buy), whereas NRDS carries a Zacks Rank of 3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
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