Critical Contrast: Aaron’s (NYSE:PRG) versus SLM (NASDAQ:SLM)

Aaron’s (NYSE:PRG) and SLM (NASDAQ:SLM) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, earnings, dividends, profitability, risk, valuation and analyst recommendations.

Analyst Ratings

This is a breakdown of current recommendations for Aaron’s and SLM, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Aaron’s	1	2	4	1	2.63
SLM	0	3	7	0	2.70

Aaron’s currently has a consensus target price of $41.50, suggesting a potential upside of 30.53%. SLM has a consensus target price of $33.89, suggesting a potential upside of 28.86%. Given Aaron’s’ higher possible upside, research analysts plainly believe Aaron’s is more favorable than SLM.

Valuation & Earnings

This table compares Aaron’s and SLM”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Aaron’s	$2.46 billion	0.51	$197.25 million	$5.06	6.28
SLM	$2.62 billion	2.09	$608.33 million	$1.99	13.22

SLM has higher revenue and earnings than Aaron’s. Aaron’s is trading at a lower price-to-earnings ratio than SLM, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Aaron’s has a beta of 1.79, indicating that its share price is 79% more volatile than the S&P 500. Comparatively, SLM has a beta of 1.11, indicating that its share price is 11% more volatile than the S&P 500.

Institutional & Insider Ownership

97.9% of Aaron’s shares are owned by institutional investors. Comparatively, 98.9% of SLM shares are owned by institutional investors. 3.2% of Aaron’s shares are owned by insiders. Comparatively, 1.3% of SLM shares are owned 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.

Profitability

This table compares Aaron’s and SLM’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Aaron’s	8.53%	22.54%	9.98%
SLM	15.46%	21.93%	1.49%

Dividends

Aaron’s pays an annual dividend of $0.52 per share and has a dividend yield of 1.6%. SLM pays an annual dividend of $0.52 per share and has a dividend yield of 2.0%. Aaron’s pays out 10.3% of its earnings in the form of a dividend. SLM pays out 26.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Aaron’s has raised its dividend for 2 consecutive years and SLM has raised its dividend for 1 consecutive years.

About Aaron’s

PROG Holdings, Inc. (NYSE:PRG) is a financial technology holding company based in Salt Lake City, Utah with three business segments: Progressive Leasing, which offers lease-to-own transactions primarily to credit-challenged consumers through e-commerce and point-of-sale retail partners, via online, mobile, and in-store solutions; Vive Financial, which provides consumers who may not qualify for traditional prime lending with a variety of second-look, revolving credit products through private label and branded credit cards; and Four Technologies, which provides consumers of all credit backgrounds Buy Now, Pay Later (BNPL) options through four interest-free installments via its platform, Four.

About SLM

SLM Corporation, through its subsidiaries, originates and services private education loans to students and their families to finance the cost of their education in the United States. It is also involved in the provision of retail deposit accounts, including certificates of deposit, money market accounts, and high-yield savings accounts; and interest-bearing omnibus accounts. The company was formerly known as New BLC Corporation and changed its name to SLM Corporation in December 2013. SLM Corporation was founded in 1972 and is headquartered in Newark, Delaware.