Contrasting Aaron’s (NYSE:PRG) & Mr. Cooper Group (NASDAQ:COOP)

Aaron’s (NYSE:PRG) and Mr. Cooper Group (NASDAQ:COOP) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, institutional ownership, dividends, risk, earnings, analyst recommendations and profitability.

Dividends

Aaron’s pays an annual dividend of $0.52 per share and has a dividend yield of 1.6%. Mr. Cooper Group pays an annual dividend of $2.00 per share and has a dividend yield of 0.9%. Aaron’s pays out 10.3% of its earnings in the form of a dividend. Mr. Cooper Group pays out 22.9% 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. Aaron’s has raised its dividend for 2 consecutive years. Aaron’s is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

97.9% of Aaron’s shares are owned by institutional investors. Comparatively, 89.8% of Mr. Cooper Group shares are owned by institutional investors. 3.2% of Aaron’s shares are owned by insiders. Comparatively, 1.7% of Mr. Cooper Group shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Aaron’s and Mr. Cooper Group”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Aaron’s	$2.46 billion	0.52	$197.25 million	$5.06	6.34
Mr. Cooper Group	$2.23 billion	6.06	$669.00 million	$8.74	24.12

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

Risk and Volatility

Aaron’s has a beta of 1.79, meaning that its stock price is 79% more volatile than the S&P 500. Comparatively, Mr. Cooper Group has a beta of 1.08, meaning that its stock price is 8% more volatile than the S&P 500.

Profitability

This table compares Aaron’s and Mr. Cooper Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Aaron’s	8.53%	22.54%	9.98%
Mr. Cooper Group	25.38%	15.66%	4.22%

Analyst Ratings

This is a summary of recent ratings for Aaron’s and Mr. Cooper Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Aaron’s	1	2	4	1	2.63
Mr. Cooper Group	0	5	5	0	2.50

Aaron’s currently has a consensus target price of $41.00, indicating a potential upside of 27.77%. Mr. Cooper Group has a consensus target price of $140.38, indicating a potential downside of 33.41%. Given Aaron’s’ stronger consensus rating and higher probable upside, analysts clearly believe Aaron’s is more favorable than Mr. Cooper Group.

Summary

Aaron’s beats Mr. Cooper Group on 12 of the 18 factors compared between the two stocks.

About Aaron’s

PROG Holdings, Inc. (NYSE:PRG) is a financial technology holding company based in Salt Lake City, Utah with three business segments: Progressive Leasing, which offers lease-to-own transactions primarily to credit-challenged consumers through e-commerce and point-of-sale retail partners, via online, mobile, and in-store solutions; Vive Financial, which provides consumers who may not qualify for traditional prime lending with a variety of second-look, revolving credit products through private label and branded credit cards; and Four Technologies, which provides consumers of all credit backgrounds Buy Now, Pay Later (BNPL) options through four interest-free installments via its platform, Four.

About Mr. Cooper Group

Mr. Cooper Group Inc., together with its subsidiaries, operates as a non-bank servicer of residential mortgage loans in the United States. The company operates through Servicing and Originations segments. The Servicing segment performs activities on behalf of investors or owners of the underlying mortgages and mortgage servicing rights, including collecting and disbursing borrower payments, investor reporting, customer service, modifying loans, performing collections, foreclosures, and the sale of real estate owned. The Originations segment originates residential mortgage loans through its direct-to-consumer and correspondent channels. The company provides its services under the Mr. Cooper and Xome brands. The company was formerly known as WMIH Corp. and changed its name to Mr. Cooper Group Inc. in October 2018. Mr. Cooper Group Inc. was incorporated in 2015 and is based in Coppell, Texas.