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

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

Profitability

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

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

Analyst Recommendations

This is a summary of recent ratings and price targets for PRA Group and LendingClub, as provided by MarketBeat.

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

PRA Group currently has a consensus target price of $26.00, suggesting a potential upside of 29.48%. LendingClub has a consensus target price of $23.07, suggesting a potential upside of 20.10%. Given PRA Group’s higher probable upside, equities research analysts plainly believe PRA Group is more favorable than LendingClub.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PRA Group	$1.20 billion	0.63	-$305.14 million	($6.73)	-2.98
LendingClub	$1.03 billion	2.14	$135.68 million	$1.49	12.89

LendingClub has lower revenue, but higher earnings 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.

Institutional and Insider Ownership

97.2% of PRA Group shares are owned by institutional investors. Comparatively, 74.1% of LendingClub shares are owned by institutional investors. 2.2% of PRA Group shares are owned by company insiders. Comparatively, 3.2% of LendingClub shares are owned by company 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.

Risk and Volatility

PRA Group has a beta of 1.15, suggesting that its share price is 15% more volatile than the S&P 500. Comparatively, LendingClub has a beta of 1.98, suggesting that its share price is 98% more volatile than the S&P 500.

Summary

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

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.

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.