Artificial intelligence (AI) is transforming consumer lending by improving credit underwriting and loan origination. Among the fintech companies benefiting from this trend are Pagaya Technologies PGY and LendingTree TREE, though they employ markedly different business models.
Pagaya uses proprietary AI and machine learning to help financial institutions originate and fund loans more efficiently, while LendingTree operates a leading online marketplace that connects borrowers with lenders across multiple loan products.
These distinct strategies create different growth drivers and risk profiles. Pagaya’s performance hinges on the adoption of its AI-powered underwriting platform, whereas LendingTree’s results depend largely on borrower demand, lender marketing spend and interest rate trends.
While both companies are positioned to benefit as digital lending continues to recover, the question arises: which stock offers the better investment opportunity now? Comparing PGY and TREE across financial performance, valuation, growth prospects and profitability can help investors identify the stronger fintech play in today’s market.
The Case for PGY
Pagaya operates a capital-light, AI-powered lending platform that partners with financial institutions to improve credit underwriting and loan origination. While the company initially focused on personal loans, it has expanded into auto lending and point-of-sale financing, diversifying its asset mix and reducing reliance on any single lending category.
Its funding model is equally resilient, supported by relationships with more than 135 institutional investors and forward-flow agreements that provide predictable capital for future loan purchases.
The company’s key competitive advantage lies in its proprietary AI technology and product suite. Its pre-screen solution enables lenders to extend pre-approved loan offers to existing customers without requiring formal applications, helping partners increase customer engagement while lowering acquisition costs.
Combined with its asset-light model, wherein loans are quickly transferred through asset-backed securities transactions or forward-flow agreements, Pagaya maintains limited balance-sheet exposure, and minimizes credit and market risk.
Pagaya’s strategy translated into a sharp financial turnaround in 2025. The company delivered positive GAAP net income in all four quarters, reporting a record net income of $81.4 million during the year versus a net loss of $401.4 million in 2024. The momentum continued in the first quarter of 2026, with GAAP net income of $24.7 million. Improved loan performance, lower credit impairments and stronger AI-driven underwriting accuracy have strengthened the company’s profitability and operating outlook.
The Case for TREE
LendingTree is a leading digital lending marketplace that connects consumers with financial service providers across mortgages, personal loans, auto loans, small business loans, credit cards and insurance. In recent years, the company has shifted its strategy toward expanding higher-growth, non-mortgage businesses to diversify revenue streams and reduce reliance on the cyclical housing market.
This strategy is delivering results. In the first quarter of 2026, the Consumer segment’s revenues rose 18% year over year, led by a 49% jump in small business revenues. LendingTree has strengthened its ecosystem through initiatives such as SPRING (formerly MyLendingTree), TreeQual and the launch of its WinCard credit card in partnership with Upgrade, enhancing customer engagement and cross-selling opportunities.
Additionally, the acquisition of EarnUp has expanded the company’s technology capabilities in consumer payments and financial wellness.
Insurance has emerged as another key growth engine. Segment revenues saw a 13.4% CAGR between 2021 and 2025, with strong momentum continuing in the first quarter of 2026, supported by higher carrier demand and improved marketing efficiency.
Overall, the company’s improving operating performance was reflected in first-quarter GAAP net income of $17.3 million against a net loss of $12.4 million a year earlier. Backed by these trends, management projects 2026 adjusted EBITDA of $152-$162 million.
PGY & TREE: Price Performance, Valuation & Other Comparisons
In the past year, shares of Pagaya have lost 20.6%, while the TREE stock has jumped 17.6%. Hence, in terms of investor sentiments, TREE has the edge.
1-Year Price Performance
From a valuation perspective, Pagaya is currently trading at a 12-month trailing price-to-book (P/B) of 2.46X, which is above TREE’s trailing 12-month P/B of 2.06X.
Thus, currently, the PGY stock is more expensive than LendingTree.
P/B TTM
Pagaya’s return on equity (ROE) of 53.68% is above LendingTree’s 27.19%. This reflects that PGY is more efficiently using shareholder funds to generate profits compared with TREE.
ROE
Pagaya & LendingTree’s Earnings & Sales Prospects
The Zacks Consensus Estimate for PGY’s 2026 and 2027 revenues is pegged at $1.48 billion and $1.68 billion, respectively, implying year-over-year growth rates of 13.7% and 13.5%.
The consensus estimate for PGY’s earnings for 2026 indicates a year-over-year decline of 2.4%, while the 2027 estimate suggests year-over-year growth of 15.2%.
PGY’s Earnings Growth Expectation
On the contrary, the Zacks Consensus Estimate for TREE’s 2026 and 2027 revenues is pegged at $1.32 billion and $1.41 billion, implying year-over-year growth rates of 18.5% and 6.4%, respectively.
Also, the consensus estimate for LendingTree’s earnings indicates a 71% year-over-year surge for 2026 and 21.4% growth for 2027.
TREE’s Earnings Growth Expectation
PGY or TREE: Which Is a Better Investment Option Now?
Both PGY and TREE have executed successful turnaround strategies and are benefiting from stronger consumer lending demand outside the traditional mortgage market.
However, despite LendingTree’s stronger near-term earnings growth outlook, Pagaya appears to be the better investment choice at the current levels as it combines an AI-first underwriting platform with a capital-light business model that enables it to scale loan originations while limiting balance-sheet risk. PGY’s return to GAAP profitability, a higher ROE than TREE and diversified funding base underscore the durability of its business model.
Although PGY trades at a modest valuation premium, that premium reflects its stronger profitability profile and differentiated AI capabilities.
Currently, PGY sports a Zacks Rank #1 (Strong Buy), while LendingTree has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
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