Moody’s (NYSE: MCO) and Pra Group (NASDAQ:PRAA) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, analyst recommendations, profitability, valuation, dividends, institutional ownership and earnings.
Institutional and Insider Ownership
88.5% of Moody’s shares are held by institutional investors. 1.0% of Moody’s shares are held by insiders. Comparatively, 2.1% of Pra Group shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.
This is a summary of current recommendations for Moody’s and Pra Group, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Moody’s currently has a consensus target price of $168.27, suggesting a potential upside of 3.30%. Pra Group has a consensus target price of $40.00, suggesting a potential upside of 3.09%. Given Moody’s’ stronger consensus rating and higher possible upside, research analysts clearly believe Moody’s is more favorable than Pra Group.
Volatility & Risk
Moody’s has a beta of 1.26, suggesting that its share price is 26% more volatile than the S&P 500. Comparatively, Pra Group has a beta of 1.45, suggesting that its share price is 45% more volatile than the S&P 500.
Moody’s pays an annual dividend of $1.76 per share and has a dividend yield of 1.1%. Pra Group does not pay a dividend. Moody’s pays out 29.0% of its earnings in the form of a dividend. Moody’s has increased its dividend for 8 consecutive years.
This table compares Moody’s and Pra Group’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Valuation & Earnings
This table compares Moody’s and Pra Group’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Moody’s||$4.20 billion||7.40||$1.00 billion||$6.07||26.84|
|Pra Group||$813.57 million||2.16||$162.26 million||$1.33||29.17|
Moody’s has higher revenue and earnings than Pra Group. Moody’s is trading at a lower price-to-earnings ratio than Pra Group, indicating that it is currently the more affordable of the two stocks.
Moody’s beats Pra Group on 12 of the 17 factors compared between the two stocks.
Moody’s Company Profile
Moody's Corporation provides credit ratings; and credit, capital markets, and economic related research, data, and analytical tools worldwide. It operates through two segments, Moody's Investors Service and Moody's Analytics. The Moody's Investors Service segment publishes credit ratings on various debt obligations and entities that issue such obligations comprising various corporate and governmental obligations, structured finance securities, and commercial paper programs. This segment provides ratings in approximately 120 countries. Its ratings are disseminated through press releases to the public through print and electronic media, including the Internet and real-time information systems for use by securities traders and investors. As of December 31, 2017, this segment had ratings relationships with approximately 4,700 non-financial corporate issuers; 4,100 financial institutions issuers; 18,000 sovereign, sub-sovereign, and supranational public finance issuers; and 1,000 infrastructure and project finance issuers, as well as rated 11,000 structured finance transactions. The Moody's Analytics segment develops products and services that support financial analysis and risk management activities of institutional participants in financial markets; and distributes research and data, such as research on debt issuers, industry studies, and commentary on topical credit related events. This segment also offers economic research, and credit data and analytical tools; software solutions and related risk management services; and offshore research and analytical services with financial training and certification programs. The company was formerly known as Dun and Bradstreet Company and changed its name to Moody's Corporation in September 2000. Moody's Corporation was founded in 1900 and is headquartered in New York, New York.
Pra Group Company Profile
PRA Group, Inc. (PRA Group) is a financial and business services company with operations in the Americas and Europe. The Company’s primary business is the purchase, collection and management of portfolios of nonperforming loans. The Company operates through the account receivables management segment. It also provides fee-based services, such as vehicle location, skip tracing and collateral recovery for auto lenders, government entities and law enforcement; revenue administration, audit and revenue discovery/recovery services for local government entities; class action claims recovery services and purchases; servicing of consumer bankruptcy accounts in the United States, and contingent collections of nonperforming loans in Europe and South America. The Company’s portfolio of nonperforming loans includes a set of accounts that can be categorized by asset type, age and size of account, level of previous collection efforts, payment history, and geography.
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