Contrasting Nelnet (NYSE:NNI) & Upbound Group (NASDAQ:UPBD)

Nelnet (NYSE:NNI) and Upbound Group (NASDAQ:UPBD) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, dividends, risk, valuation and institutional ownership.

Analyst Recommendations

This is a breakdown of recent recommendations for Nelnet and Upbound Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Nelnet	1	2	0	0	1.67
Upbound Group	1	2	1	0	2.00

Nelnet presently has a consensus price target of $140.00, suggesting a potential upside of 12.17%. Upbound Group has a consensus price target of $28.00, suggesting a potential upside of 75.11%. Given Upbound Group’s stronger consensus rating and higher possible upside, analysts plainly believe Upbound Group is more favorable than Nelnet.

Valuation & Earnings

This table compares Nelnet and Upbound Group”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Nelnet	$2.26 billion	1.98	$428.47 million	$8.36	14.93
Upbound Group	$4.70 billion	0.20	$73.24 million	$1.54	10.38

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

Profitability

This table compares Nelnet and Upbound Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Nelnet	14.35%	8.26%	2.11%
Upbound Group	1.90%	34.53%	7.69%

Insider and Institutional Ownership

33.5% of Nelnet shares are owned by institutional investors. Comparatively, 90.3% of Upbound Group shares are owned by institutional investors. 40.3% of Nelnet shares are owned by company insiders. Comparatively, 1.2% of Upbound Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Volatility and Risk

Nelnet has a beta of 0.76, suggesting that its stock price is 24% less volatile than the S&P 500. Comparatively, Upbound Group has a beta of 1.77, suggesting that its stock price is 77% more volatile than the S&P 500.

Dividends

Nelnet pays an annual dividend of $1.32 per share and has a dividend yield of 1.1%. Upbound Group pays an annual dividend of $1.56 per share and has a dividend yield of 9.8%. Nelnet pays out 15.8% of its earnings in the form of a dividend. Upbound Group pays out 101.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Upbound Group has raised its dividend for 5 consecutive years. Upbound Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Upbound Group beats Nelnet on 10 of the 17 factors compared between the two stocks.

About Nelnet

Nelnet, Inc. engages in loan servicing, communications, education technology, services, and payment processing businesses worldwide. The Loan Servicing and Systems segment provides loan conversion, application processing, borrower updates, customer service, payment processing, due diligence procedures, funds management reconciliation, and claim processing services. This segment also offers student loan servicing software; business process outsourcing services specialized in contact center management, such as inbound calls, outreach campaigns and sales, and interacting with customers through multi-channels, and processing and technology services. The Education Technology Services and Payments segment provides financial management services; school information system software; website design and cost-effective admissions software; FACTS Giving, a donation platform; and customized professional development and coaching services, educational instruction services, and technology products that aid in teacher and student evaluations. This segment also offers tuition payment plans, and service and technology for student billings, payments, and refunds; solutions for in-person, online, and mobile payment experiences on campus; payment processing services, such as credit card and electronic transfer; faith community, giving, and learning management services and technologies; and an integrated commerce payment platform, financial management, and tuition payment plan services, as well as a school management platform that provides administrative, information and financial management, and communication functions for K-12 schools. The Asset Generation and Management segment acquires, manages, and owns loan assets. The Nelnet Bank segment operates as an internet industrial bank. It also offers investment advisory, insurance, and reinsurance services, as well as engages in real estate investment business. The company was incorporated in 1977 and is headquartered in Lincoln, Nebraska.

About Upbound Group

Upbound Group, Inc. leases household durable goods to customers on a lease-to-own basis in the United States, Puerto Rico, and Mexico. It operates through four segments: Rent-A-Center, Acima, Mexico, and Franchising. The company's brands, such as Rent-A-Center and Acima that facilitate consumer transactions across a range of store-based and virtual channels. It offers furniture comprising mattresses, tires, consumer electronics, appliances, tools, handbags, computers, smartphones, and accessories. It also provides merchandise on an installment sales basis; and the lease-to-own transaction to consumers who do not qualify for traditional financing, the lease to-own transaction through staffed or unstaffed kiosks located in third-party retailer's locations, and other virtual options. It operates retail installment sales stores under the Get It Now and Home Choice names; lease-to-own and franchised lease-to-own stores under the Rent-A-Centre, ColorTyme, and RimTyme names; and company-owned stores and e-commerce platform through rentacenter.com. The company was formerly known as Rent-A-Center, Inc. and changed its name to Upbound Group, Inc. in February 2023. Upbound Group, Inc. was founded in 1960 and is based in Plano, Texas.