Reviewing Navient (NASDAQ:NAVI) and SLM (NASDAQ:SLM)

Navient (NASDAQ:NAVI) and SLM (NASDAQ:SLM) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, profitability, risk, analyst recommendations, institutional ownership, dividends and earnings.

Institutional & Insider Ownership

97.1% of Navient shares are owned by institutional investors. Comparatively, 98.9% of SLM shares are owned by institutional investors. 31.2% of Navient shares are owned by company insiders. Comparatively, 1.3% of SLM shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Dividends

Navient pays an annual dividend of $0.64 per share and has a dividend yield of 5.1%. SLM pays an annual dividend of $0.52 per share and has a dividend yield of 1.7%. Navient pays out 206.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. SLM pays out 26.1% of its earnings in the form of a dividend. SLM has increased its dividend for 1 consecutive years.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Navient	0.89%	4.08%	0.21%
SLM	15.46%	21.93%	1.49%

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Navient and SLM, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Navient	3	5	0	1	1.89
SLM	0	1	9	0	2.90

Navient presently has a consensus target price of $13.56, indicating a potential upside of 7.13%. SLM has a consensus target price of $35.00, indicating a potential upside of 12.07%. Given SLM’s stronger consensus rating and higher probable upside, analysts plainly believe SLM is more favorable than Navient.

Risk and Volatility

Navient has a beta of 1.37, indicating that its share price is 37% more volatile than the S&P 500. Comparatively, SLM has a beta of 1.13, indicating that its share price is 13% more volatile than the S&P 500.

Earnings & Valuation

This table compares Navient and SLM”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Navient	$4.43 billion	0.29	$131.00 million	$0.31	40.84
SLM	$2.62 billion	2.49	$608.33 million	$1.99	15.69

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

Summary

SLM beats Navient on 12 of the 18 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 SLM

SLM Corporation, through its subsidiaries, originates and services private education loans to students and their families to finance the cost of their education in the United States. It is also involved in the provision of retail deposit accounts, including certificates of deposit, money market accounts, and high-yield savings accounts; and interest-bearing omnibus accounts. The company was formerly known as New BLC Corporation and changed its name to SLM Corporation in December 2013. SLM Corporation was founded in 1972 and is headquartered in Newark, Delaware.