Contrasting LendingClub (NYSE:LC) and PRA Group (NASDAQ:PRAA)

LendingClub (NYSE:LC) and PRA Group (NASDAQ:PRAA) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, analyst recommendations, institutional ownership, dividends, profitability, earnings and risk.

Institutional and Insider Ownership

74.1% of LendingClub shares are held by institutional investors. Comparatively, 97.2% of PRA Group shares are held by institutional investors. 3.2% of LendingClub 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 large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Volatility and Risk

LendingClub has a beta of 1.98, indicating that its share price is 98% more volatile than the S&P 500. Comparatively, PRA Group has a beta of 1.13, indicating that its share price is 13% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
LendingClub	16.99%	11.92%	1.55%
PRA Group	-19.91%	15.56%	3.18%

Analyst Recommendations

This is a summary of current ratings and recommmendations for LendingClub and PRA Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
LendingClub	0	2	6	1	2.89
PRA Group	1	3	1	0	2.00

LendingClub currently has a consensus target price of $23.07, suggesting a potential upside of 20.10%. PRA Group has a consensus target price of $26.00, suggesting a potential upside of 36.27%. Given PRA Group’s higher possible upside, analysts clearly believe PRA Group is more favorable than LendingClub.

Earnings and Valuation

This table compares LendingClub and PRA Group”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
LendingClub	$1.03 billion	2.14	$135.68 million	$1.49	12.89
PRA Group	$1.20 billion	0.60	-$305.14 million	($6.73)	-2.84

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

Summary

LendingClub beats PRA Group on 10 of the 15 factors compared between the two stocks.

About LendingClub

LendingClub Corporation, operates as a bank holding company, that provides range of financial products and services in the United States. It offers deposit products, including savings accounts, checking accounts, and certificates of deposit. The company also provides loan products, such as consumer loans comprising unsecured personal loans, secured auto refinance loans, and patient and education finance loans; and commercial loans, including small business loans. In addition, it operates an online lending marketplace platform. The company was incorporated in 2006 and is headquartered in San Francisco, California.

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.