Critical Analysis: Lufax (NYSE:LU) versus PRA Group (NASDAQ:PRAA)

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

Institutional and Insider Ownership

97.2% of PRA Group shares are held by institutional investors. Comparatively, 69.1% of Lufax shares are held by institutional investors. 2.0% of PRA Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Risk & Volatility

PRA Group has a beta of 1.32, meaning that its share price is 32% more volatile than the S&P 500. Comparatively, Lufax has a beta of 0.57, meaning that its share price is 43% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for PRA Group and Lufax, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PRA Group	1	0	3	1	2.80
Lufax	2	0	0	0	1.00

PRA Group currently has a consensus price target of $25.00, suggesting a potential upside of 43.84%. Given PRA Group’s stronger consensus rating and higher probable upside, research analysts plainly believe PRA Group is more favorable than Lufax.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
PRA Group	-29.55%	7.03%	1.66%
Lufax	N/A	N/A	N/A

Valuation and Earnings

This table compares PRA Group and Lufax”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PRA Group	$1.11 billion	0.61	$70.60 million	($8.79)	-1.98
Lufax	$4.82 billion	0.48	$125.31 million	($0.77)	-3.49

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

Summary

PRA Group beats Lufax on 11 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 Lufax

Lufax Holding Ltd operates as a financial service empowering institution for small and micro businesses in China. The company offers loan products, including general unsecured loans and secured loans, as well as consumer finance loans. It also provides wealth management products, such as asset management plans, mutual fund products, private investment fund products, and trust products. The company was founded in 2005 and is headquartered in Shanghai, China.