Head to Head Contrast: PPDAI Group (NYSE:FINV) & Encore Capital Group (NASDAQ:ECPG)

Encore Capital Group (NASDAQ:ECPG) and PPDAI Group (NYSE:FINV) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, institutional ownership, risk, earnings, dividends and valuation.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Encore Capital Group and PPDAI Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Encore Capital Group	0	0	5	1	3.17
PPDAI Group	1	1	0	0	1.50

Encore Capital Group currently has a consensus price target of $89.75, suggesting a potential downside of 8.36%. PPDAI Group has a consensus price target of $4.10, suggesting a potential upside of 20.77%. Given PPDAI Group’s higher possible upside, analysts plainly believe PPDAI Group is more favorable than Encore Capital Group.

Insider and Institutional Ownership

31.1% of PPDAI Group shares are owned by institutional investors. 3.0% of Encore Capital Group shares are owned by company insiders. Comparatively, 44.0% of PPDAI Group shares are owned 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.

Profitability

This table compares Encore Capital Group and PPDAI Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Encore Capital Group	15.86%	29.83%	5.58%
PPDAI Group	14.49%	12.31%	7.95%

Valuation and Earnings

This table compares Encore Capital Group and PPDAI Group”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Encore Capital Group	$1.77 billion	1.17	$256.83 million	$13.21	7.41
PPDAI Group	$1.94 billion	0.43	$363.56 million	$1.06	3.20

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

Risk and Volatility

Encore Capital Group has a beta of 1.27, suggesting that its share price is 27% more volatile than the S&P 500. Comparatively, PPDAI Group has a beta of 0.34, suggesting that its share price is 66% less volatile than the S&P 500.

Summary

Encore Capital Group beats PPDAI Group on 9 of the 15 factors compared between the two stocks.

About Encore Capital Group

Encore Capital Group, Inc., a specialty finance company, provides debt recovery solutions and other related services for consumers across financial assets worldwide. The company purchases portfolios of defaulted consumer receivables at deep discounts to face value, as well as manages them by working with individuals as they repay their obligations and works toward financial recovery. It is also involved in the provision of early stage collection, business process outsourcing, and contingent collection services. In addition, the company engages in debt servicing and other portfolio management services to credit originator for non-performing loans. Further, it offers credit management services. Encore Capital Group, Inc. was incorporated in 1999 and is headquartered in San Diego, California.

About PPDAI Group

FinVolution Group operates in the online consumer finance industry. The company operates a fintech platform that is empowered by borrowers with financial institutions. It operates in China and internationally. The company was formerly known as PPDAI Group Inc. and changed its name to FinVolution Group in November 2019. FinVolution Group was founded in 2007 and is headquartered in Shanghai, the People’s Republic of China.