Navient Corporation (NASDAQ: NAVI) and Synchrony Financial (NYSE:SYF) are both mid-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, valuation, risk, dividends, profitabiliy and analyst recommendations.
Risk & Volatility
Navient Corporation has a beta of 2.48, indicating that its share price is 148% more volatile than the S&P 500. Comparatively, Synchrony Financial has a beta of 1.02, indicating that its share price is 2% more volatile than the S&P 500.
Institutional & Insider Ownership
94.3% of Navient Corporation shares are owned by institutional investors. Comparatively, 88.9% of Synchrony Financial shares are owned by institutional investors. 1.7% of Navient Corporation shares are owned by insiders. Comparatively, 0.0% of Synchrony Financial shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
This table compares Navient Corporation and Synchrony Financial’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Earnings & Valuation
This table compares Navient Corporation and Synchrony Financial’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Navient Corporation||$1.94 billion||2.40||$538.54 million||$1.89||8.64|
|Synchrony Financial||$6.95 billion||3.40||$2.12 billion||$2.62||11.11|
Synchrony Financial has higher revenue and earnings than Navient Corporation. Navient Corporation is trading at a lower price-to-earnings ratio than Synchrony Financial, indicating that it is currently the more affordable of the two stocks.
Navient Corporation pays an annual dividend of $0.64 per share and has a dividend yield of 3.9%. Synchrony Financial pays an annual dividend of $0.52 per share and has a dividend yield of 1.8%. Navient Corporation pays out 33.9% of its earnings in the form of a dividend. Synchrony Financial pays out 19.8% 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.
This is a breakdown of current ratings and recommmendations for Navient Corporation and Synchrony Financial, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Navient Corporation presently has a consensus price target of $18.75, suggesting a potential upside of 14.82%. Synchrony Financial has a consensus price target of $37.36, suggesting a potential upside of 28.39%. Given Synchrony Financial’s stronger consensus rating and higher probable upside, analysts clearly believe Synchrony Financial is more favorable than Navient Corporation.
Synchrony Financial beats Navient Corporation on 12 of the 16 factors compared between the two stocks.
About Navient Corporation
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.
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.
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