PRA Group (NASDAQ:PRAA) and SLM (NASDAQ:SLM) Critical Contrast

PRA Group (NASDAQ:PRAA) and SLM (NASDAQ:SLM) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their risk, earnings, dividends, institutional ownership, valuation, profitability and analyst recommendations.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PRA Group	$1.20 billion	0.65	-$305.14 million	($6.73)	-3.06
SLM	$2.63 billion	1.99	$744.85 million	$3.58	7.76

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

Institutional & Insider Ownership

97.2% of PRA Group shares are owned by institutional investors. Comparatively, 98.9% of SLM shares are owned by institutional investors. 2.2% of PRA Group shares are owned by insiders. Comparatively, 1.4% of SLM shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
PRA Group	-19.91%	15.56%	3.18%
SLM	26.09%	33.81%	2.51%

Analyst Recommendations

This is a breakdown of current ratings and target prices for PRA Group and SLM, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PRA Group	1	2	1	1	2.40
SLM	1	6	5	0	2.33

PRA Group currently has a consensus price target of $26.00, indicating a potential upside of 26.05%. SLM has a consensus price target of $29.80, indicating a potential upside of 7.24%. Given PRA Group’s stronger consensus rating and higher probable upside, equities research analysts plainly believe PRA Group is more favorable than SLM.

Volatility & Risk

PRA Group has a beta of 1.11, meaning that its stock price is 11% more volatile than the S&P 500. Comparatively, SLM has a beta of 0.96, meaning that its stock price is 4% less volatile than the S&P 500.

Summary

SLM beats PRA Group on 9 of the 15 factors compared between the two stocks.

About PRA Group

PRA Group, Inc., a financial and business services company, engages in the purchase, collection, and management of portfolios of nonperforming loans worldwide. It is involved in the purchase of accounts that are primarily the unpaid obligations of individuals owed to credit originators, which include banks and other types of consumer, retail, and auto finance companies. The company also acquires nonperforming loans, including Visa and MasterCard credit card accounts, private label and other credit card accounts, personal loans, automobile loans, and small business loans from banks, credit unions, consumer finance companies, retailers, utilities, automobile finance companies, and other credit originators. In addition, it provides fee-based services on class action claims recoveries. The company was formerly known as Portfolio Recovery Associates, Inc. and changed its name to PRA Group, Inc. in October 2014. PRA Group, Inc. was founded in 1996 and is headquartered in Norfolk, Virginia.

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.