Navient Corp (NASDAQ: NAVIV) and Discover Financial Services (NYSE:DFS) are both financials companies, but which is the superior stock? We will compare the two businesses based on the strength of their dividends, risk, analyst recommendations, profitability, institutional ownership, earnings and valuation.

Dividends

Discover Financial Services pays an annual dividend of $1.40 per share and has a dividend yield of 2.3%. Navient Corp does not pay a dividend. Discover Financial Services pays out 24.2% of its earnings in the form of a dividend. Navient Corp has raised its dividend for 6 consecutive years.

Valuation & Earnings

This table compares Navient Corp and Discover Financial Services’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Navient Corp N/A N/A N/A N/A N/A
Discover Financial Services $7.17 billion 3.09 $2.16 billion $5.79 10.29

Discover Financial Services has higher revenue and earnings than Navient Corp.

Insider & Institutional Ownership

86.2% of Discover Financial Services shares are owned by institutional investors. 1.0% of Discover Financial Services shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Navient Corp and Discover Financial Services’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Navient Corp 31.91% 12.50% 0.38%
Discover Financial Services 20.91% 21.28% 2.46%

Analyst Recommendations

This is a summary of recent ratings and price targets for Navient Corp and Discover Financial Services, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Navient Corp 0 0 0 0 N/A
Discover Financial Services 1 7 15 0 2.61

Discover Financial Services has a consensus price target of $73.89, indicating a potential upside of 24.00%. Given Discover Financial Services’ higher possible upside, analysts plainly believe Discover Financial Services is more favorable than Navient Corp.

Summary

Discover Financial Services beats Navient Corp on 8 of the 11 factors compared between the two stocks.

Navient Corp Company Profile

Navient Corporation provides asset management and business processing services to education, healthcare and government clients at the federal, state and local levels. The Company holds the portfolio of education loans insured or federally guaranteed under the Federal Family Education Loan Program (FFELP). It operates through four segments: FFELP Loans, Private Education Loans, Business Services and Other. It also holds the portfolio of Private Education Loans. It services its own portfolio of education loans, as well as education loans owned by the United States Department of Education (ED), financial institutions and nonprofit education lenders. It also provides business processing services to education-related clients, such as guaranty agencies and colleges and universities. It provides additional business processing services to a range of other clients, including federal agencies, state and local governments, healthcare systems and other healthcare providers and municipalities.

Discover Financial Services Company Profile

Discover Financial Services (DFS) is a direct banking and payment services company. The Company is a bank holding company, as well as a financial holding company. The Company operates through two segments: Direct Banking and Payment Services. It provides direct banking products and services, and payment services through its subsidiaries. It offers its customers credit card loans, private student loans, personal loans, home equity loans and deposit products. The Company’s Direct Banking segment includes consumer banking and lending products, specifically Discover-branded credit cards issued to individuals and small businesses on the Discover Network and other consumer banking products and services. The Company’s direct banking offers credit cards, student loans, personal loans, home equity loans, and other consumer lending and deposit products. The Payment Services segment includes PULSE, Diners Club and the Company’s Network Partners business.

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