SLM (NASDAQ:SLM – Get Free Report) and PRA Group (NASDAQ:PRAA – Get Free Report) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, dividends, earnings, analyst recommendations, profitability, institutional ownership and risk.
Volatility and Risk
SLM has a beta of 0.96, indicating that its stock price is 4% less volatile than the S&P 500. Comparatively, PRA Group has a beta of 1.11, indicating that its stock price is 11% more volatile than the S&P 500.
Profitability
This table compares SLM and PRA Group’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| SLM | 26.09% | 33.81% | 2.51% |
| PRA Group | -22.51% | 13.19% | 2.85% |
Valuation & Earnings
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| SLM | $2.63 billion | 1.96 | $744.85 million | $3.58 | 7.65 |
| PRA Group | $1.26 billion | 0.60 | -$305.14 million | ($7.16) | -2.76 |
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
98.9% of SLM shares are held by institutional investors. Comparatively, 97.2% of PRA Group shares are held by institutional investors. 1.4% of SLM shares are held by company insiders. Comparatively, 2.2% of PRA Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Analyst Ratings
This is a summary of recent ratings and price targets for SLM and PRA Group, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| SLM | 1 | 6 | 5 | 0 | 2.33 |
| PRA Group | 1 | 3 | 1 | 0 | 2.00 |
SLM presently has a consensus target price of $29.80, suggesting a potential upside of 8.88%. PRA Group has a consensus target price of $26.00, suggesting a potential upside of 31.38%. Given PRA Group’s higher probable upside, analysts clearly believe PRA Group is more favorable than SLM.
Summary
SLM beats PRA Group on 10 of the 14 factors compared between the two stocks.
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.
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.
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