Critical Review: Medallion Financial (NASDAQ:MFIN) versus Navient (NASDAQ:NAVI)

Navient (NASDAQ:NAVI) and Medallion Financial (NASDAQ:MFIN) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, institutional ownership, dividends, analyst recommendations, valuation, profitability and earnings.

Valuation & Earnings

This table compares Navient and Medallion Financial”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Navient	$601.00 million	1.33	-$80.00 million	($0.50)	-17.00
Medallion Financial	$353.31 million	0.74	$43.04 million	$1.33	8.59

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

Institutional & Insider Ownership

97.1% of Navient shares are owned by institutional investors. Comparatively, 40.6% of Medallion Financial shares are owned by institutional investors. 33.8% of Navient shares are owned by insiders. Comparatively, 24.6% of Medallion Financial shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Navient and Medallion Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Navient	-1.64%	4.68%	0.23%
Medallion Financial	9.25%	7.11%	1.20%

Analyst Ratings

This is a breakdown of recent ratings and target prices for Navient and Medallion Financial, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Navient	4	3	0	1	1.75
Medallion Financial	1	4	0	0	1.80

Navient currently has a consensus price target of $8.17, indicating a potential downside of 3.92%. Medallion Financial has a consensus price target of $12.62, indicating a potential upside of 10.55%. Given Medallion Financial’s stronger consensus rating and higher probable upside, analysts clearly believe Medallion Financial is more favorable than Navient.

Volatility & Risk

Navient has a beta of 1.15, indicating that its stock price is 15% more volatile than the S&P 500. Comparatively, Medallion Financial has a beta of 0.79, indicating that its stock price is 21% less volatile than the S&P 500.

Dividends

Navient pays an annual dividend of $0.64 per share and has a dividend yield of 7.5%. Medallion Financial pays an annual dividend of $0.56 per share and has a dividend yield of 4.9%. Navient pays out -128.0% of its earnings in the form of a dividend. Medallion Financial pays out 42.1% 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. Navient is clearly the better dividend stock, given its higher yield and lower payout ratio.

About Navient

Navient Corporation provides technology-enabled education finance and business processing solutions for education, health care, and government clients in the United States. It operates through three segments: Federal Education Loans, Consumer Lending, and Business Processing. The company owns Federal Family Education Loan Program (FFELP) loans that are insured or guaranteed by state or not-for-profit agencies; and performs servicing on its portfolios, as well as federal education loans held by other institutions. It also owns, originates, and services refinance and in-school private education loans; and offers business processing solutions, such as omnichannel contact center, workflow processing, and revenue cycle optimization services to federal agencies, state governments, tolling and parking authorities, other public sector clients, as well as hospitals, hospital systems, medical centers, large physician groups, other healthcare providers, and public health departments. In addition, the company provides corporate liquidity portfolio services. Navient Corporation was founded in 1973 and is headquartered in Herndon, Virginia.

About Medallion Financial

Medallion Financial Corp., together with its subsidiaries, operates as a specialty finance company in the United States. It operates in four segments: Recreation Lending, Home Improvement Lending, Commercial Lending, and Taxi Medallion Lending. The company offers loans that finance consumer purchases of recreational vehicles, boats, and other consumer recreational equipment; consumer financing for window, siding, and roof replacement, swimming pool installations, and other home improvement projects; senior and subordinated loans for the purchase of equipment and related assets necessary to open a new business, or purchase or improvement of an existing business; and taxi medallion loans to individuals and small to mid-size businesses. It also provides debt, mezzanine, and equity investment capital to companies in various commercial industries; and raises deposits and conducts other banking activities. Medallion Financial Corp. was incorporated in 1995 and is headquartered in New York City, New York.