Contrasting Navient (NASDAQ:NAVI) & Credit Acceptance (NASDAQ:CACC)

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

Profitability

This table compares Navient and Credit Acceptance’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%
Credit Acceptance	18.69%	27.06%	5.08%

Risk and Volatility

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

Institutional and Insider Ownership

97.1% of Navient shares are owned by institutional investors. Comparatively, 81.7% of Credit Acceptance shares are owned by institutional investors. 31.2% of Navient shares are owned by company insiders. Comparatively, 6.6% of Credit Acceptance shares are owned 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.

Valuation & Earnings

This table compares Navient and Credit Acceptance”s top-line revenue, earnings per share (EPS) 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	41.23
Credit Acceptance	$2.16 billion	2.47	$247.90 million	$34.69	13.69

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

Analyst Recommendations

This is a breakdown of recent recommendations for Navient and Credit Acceptance, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Navient	3	5	0	1	1.89
Credit Acceptance	1	1	0	0	1.50

Navient presently has a consensus target price of $13.5625, indicating a potential upside of 6.12%. Credit Acceptance has a consensus target price of $440.00, indicating a potential downside of 7.32%. Given Navient’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Navient is more favorable than Credit Acceptance.

Summary

Navient beats Credit Acceptance on 8 of the 14 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 Credit Acceptance

Credit Acceptance Corporation engages in the provision of financing programs, and related products and services in the United States. The company advances money to automobile dealers in exchange for the right to service the underlying consumer loans; and buys the consumer loans from the dealers and keeps the amount collected from the consumers. It is also involved in the business of reinsuring coverage under vehicle service contracts sold to consumers by dealers on vehicles financed by the company. The company serves independent and franchised automobile dealers. Credit Acceptance Corporation was incorporated in 1972 and is headquartered in Southfield, Michigan.