Comparing PRA Group (NASDAQ:PRAA) and Navient (NASDAQ:NAVI)

Navient (NASDAQ:NAVI) and PRA Group (NASDAQ:PRAA) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, institutional ownership, dividends, risk, analyst recommendations, earnings and valuation.

Earnings & Valuation

This table compares Navient and PRA Group”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Navient	$3.20 billion	0.28	-$80.00 million	($0.50)	-19.26
PRA Group	$1.20 billion	0.60	-$305.14 million	($6.73)	-2.83

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

Volatility and Risk

Navient has a beta of 1.18, suggesting that its share price is 18% more volatile than the S&P 500. Comparatively, PRA Group has a beta of 1.11, suggesting that its share price is 11% more volatile than the S&P 500.

Profitability

This table compares Navient and PRA Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Navient	-1.64%	4.68%	0.23%
PRA Group	-19.91%	15.56%	3.18%

Institutional & Insider Ownership

97.1% of Navient shares are held by institutional investors. Comparatively, 97.2% of PRA Group shares are held by institutional investors. 33.8% of Navient 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 endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and price targets for Navient and PRA Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Navient	4	5	0	0	1.56
PRA Group	1	2	1	1	2.40

Navient currently has a consensus price target of $9.14, indicating a potential downside of 5.06%. PRA Group has a consensus price target of $26.00, indicating a potential upside of 36.70%. Given PRA Group’s stronger consensus rating and higher possible upside, analysts clearly believe PRA Group is more favorable than Navient.

Summary

PRA Group beats Navient on 9 of the 15 factors compared between the two stocks.

About Navient

Navient Corporation provides technology-enabled education finance and business processing solutions for education, health care, and government clients in the United States. It operates through three segments: Federal Education Loans, Consumer Lending, and Business Processing. The company owns Federal Family Education Loan Program (FFELP) loans that are insured or guaranteed by state or not-for-profit agencies; and performs servicing on its portfolios, as well as federal education loans held by other institutions. It also owns, originates, and services refinance and in-school private education loans; and offers business processing solutions, such as omnichannel contact center, workflow processing, and revenue cycle optimization services to federal agencies, state governments, tolling and parking authorities, other public sector clients, as well as hospitals, hospital systems, medical centers, large physician groups, other healthcare providers, and public health departments. In addition, the company provides corporate liquidity portfolio services. Navient Corporation was founded in 1973 and is headquartered in Herndon, Virginia.

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.