Comparing Nelnet (NYSE:NNI) & Yirendai (NYSE:YRD)

Yirendai (NYSE:YRD) and Nelnet (NYSE:NNI) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, valuation, profitability, risk, dividends and earnings.

Earnings & Valuation

This table compares Yirendai and Nelnet”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Yirendai	$817.84 million	0.11	$7.80 million	($1.18)	-0.83
Nelnet	$2.26 billion	2.00	$428.47 million	$8.36	15.06

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

Institutional & Insider Ownership

2.0% of Yirendai shares are owned by institutional investors. Comparatively, 33.5% of Nelnet shares are owned by institutional investors. 42.2% of Yirendai shares are owned by insiders. Comparatively, 40.3% of Nelnet shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Yirendai and Nelnet, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Yirendai	1	0	0	0	1.00
Nelnet	1	2	0	0	1.67

Nelnet has a consensus target price of $140.00, suggesting a potential upside of 11.21%. Given Nelnet’s stronger consensus rating and higher possible upside, analysts clearly believe Nelnet is more favorable than Yirendai.

Dividends

Yirendai pays an annual dividend of $0.20 per share and has a dividend yield of 20.3%. Nelnet pays an annual dividend of $1.32 per share and has a dividend yield of 1.0%. Yirendai pays out -16.9% of its earnings in the form of a dividend. Nelnet pays out 15.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Yirendai is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk and Volatility

Yirendai has a beta of 1.14, suggesting that its share price is 14% more volatile than the S&P 500. Comparatively, Nelnet has a beta of 0.76, suggesting that its share price is 24% less volatile than the S&P 500.

Profitability

This table compares Yirendai and Nelnet’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Yirendai	-14.35%	-7.58%	-5.21%
Nelnet	14.35%	8.26%	2.11%

Summary

Nelnet beats Yirendai on 11 of the 15 factors compared between the two stocks.

About Yirendai

Yiren Digital Ltd. provides financial services through an AI-powered platform in China. Its platform provides a suite of financial and lifestyle services. The company offers financial services, which provides a portfolio of loan products to borrowers; insurance brokerage services; and consumption and lifestyle services, including non-financial products and services to meet various consumer needs. It supports clients at various growth stages, addressing financing needs arising from consumption and production activities, and augmenting the well-being and security of individuals, families, and businesses. The company was formerly known as Yirendai Ltd. and changed its name to Yiren Digital Ltd. in September 2019. Yiren Digital Ltd. was founded in 2012 and is based in Beijing, the People's Republic of China. Yiren Digital Ltd. operates as a subsidiary of CreditEase Holdings (Cayman) Limited.

About Nelnet

Nelnet, Inc. engages in loan servicing, communications, education technology, services, and payment processing businesses worldwide. The Loan Servicing and Systems segment provides loan conversion, application processing, borrower updates, customer service, payment processing, due diligence procedures, funds management reconciliation, and claim processing services. This segment also offers student loan servicing software; business process outsourcing services specialized in contact center management, such as inbound calls, outreach campaigns and sales, and interacting with customers through multi-channels, and processing and technology services. The Education Technology Services and Payments segment provides financial management services; school information system software; website design and cost-effective admissions software; FACTS Giving, a donation platform; and customized professional development and coaching services, educational instruction services, and technology products that aid in teacher and student evaluations. This segment also offers tuition payment plans, and service and technology for student billings, payments, and refunds; solutions for in-person, online, and mobile payment experiences on campus; payment processing services, such as credit card and electronic transfer; faith community, giving, and learning management services and technologies; and an integrated commerce payment platform, financial management, and tuition payment plan services, as well as a school management platform that provides administrative, information and financial management, and communication functions for K-12 schools. The Asset Generation and Management segment acquires, manages, and owns loan assets. The Nelnet Bank segment operates as an internet industrial bank. It also offers investment advisory, insurance, and reinsurance services, as well as engages in real estate investment business. The company was incorporated in 1977 and is headquartered in Lincoln, Nebraska.