Synchrony Financial (NYSE: SYF) and Navient Corp (NASDAQ:NAVI) are both mid-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, dividends, earnings, profitabiliy, analyst recommendations, institutional ownership and valuation.
Synchrony Financial pays an annual dividend of $0.60 per share and has a dividend yield of 2.0%. Navient Corp pays an annual dividend of $0.64 per share and has a dividend yield of 4.5%. Synchrony Financial pays out 22.6% of its earnings in the form of a dividend. Navient Corp pays out 33.7% 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.
Risk & Volatility
Synchrony Financial has a beta of 1.01, suggesting that its share price is 1% more volatile than the S&P 500. Comparatively, Navient Corp has a beta of 2.43, suggesting that its share price is 143% more volatile than the S&P 500.
Insider and Institutional Ownership
88.1% of Synchrony Financial shares are held by institutional investors. Comparatively, 94.2% of Navient Corp shares are held by institutional investors. 0.0% of Synchrony Financial shares are held by company insiders. Comparatively, 1.7% of Navient Corp shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
This is a breakdown of current ratings and recommmendations for Synchrony Financial and Navient Corp, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Synchrony Financial presently has a consensus target price of $37.13, indicating a potential upside of 24.29%. Navient Corp has a consensus target price of $18.83, indicating a potential upside of 31.98%. Given Navient Corp’s higher probable upside, analysts plainly believe Navient Corp is more favorable than Synchrony Financial.
Earnings and Valuation
This table compares Synchrony Financial and Navient Corp’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Synchrony Financial||$7.04 billion||3.37||$2.11 billion||$2.65||11.27|
|Navient Corp||$1.91 billion||2.05||$520.79 million||$1.90||7.51|
Synchrony Financial has higher revenue and earnings than Navient Corp. Navient Corp is trading at a lower price-to-earnings ratio than Synchrony Financial, indicating that it is currently the more affordable of the two stocks.
This table compares Synchrony Financial and Navient Corp’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Synchrony Financial beats Navient Corp on 10 of the 16 factors compared between the two stocks.
About Synchrony Financial
Synchrony Financial is a consumer financial services company. The Company provides a range of credit products through programs it has established with a group of national and regional retailers, local merchants, manufacturers, buying groups, industry associations and healthcare service providers. The Company’s revenue activities are managed through three sales platforms: Retail Card, Payment Solutions and CareCredit. It offers its credit products through its subsidiary, Synchrony Bank (the Bank). Through the Bank, it offers a range of deposit products insured by the Federal Deposit Insurance Corporation (FDIC), including certificates of deposit, individual retirement accounts (IRAs), money market accounts and savings accounts. The Company offers three types of credit products: credit cards, commercial credit products and consumer installment loans. The Company also offers a debt cancellation product. It offers two types of credit cards: private label credit cards and Dual Cards.
About Navient Corp
Navient Corporation provides asset management and business processing services to education, healthcare and government clients at the federal, state and local levels. The Company holds the portfolio of education loans insured or federally guaranteed under the Federal Family Education Loan Program (FFELP). It operates through four segments: FFELP Loans, Private Education Loans, Business Services and Other. It also holds the portfolio of Private Education Loans. It services its own portfolio of education loans, as well as education loans owned by the United States Department of Education (ED), financial institutions and nonprofit education lenders. It also provides business processing services to education-related clients, such as guaranty agencies and colleges and universities. It provides additional business processing services to a range of other clients, including federal agencies, state and local governments, healthcare systems and other healthcare providers and municipalities.
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