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

Insider and Institutional Ownership

86.4% of Regional Management shares are held by institutional investors. Comparatively, 92.7% of Navient shares are held by institutional investors. 9.5% of Regional Management shares are held by company insiders. Comparatively, 1.7% of Navient shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and recommmendations for Regional Management and Navient, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Regional Management 0 4 1 0 2.20
Navient 0 6 5 0 2.45

Regional Management presently has a consensus price target of $26.40, indicating a potential downside of 4.62%. Navient has a consensus price target of $18.00, indicating a potential upside of 28.48%. Given Navient’s stronger consensus rating and higher possible upside, analysts plainly believe Navient is more favorable than Regional Management.

Volatility and Risk

Regional Management has a beta of 1.38, meaning that its share price is 38% more volatile than the S&P 500. Comparatively, Navient has a beta of 2.37, meaning that its share price is 137% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Regional Management 9.66% 12.62% 3.78%
Navient 10.88% 14.09% 0.43%

Dividends

Navient pays an annual dividend of $0.64 per share and has a dividend yield of 4.6%. Regional Management does not pay a dividend. Navient pays out 35.4% of its earnings in the form of a dividend.

Earnings & Valuation

This table compares Regional Management and Navient’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Regional Management $240.52 million 1.34 $24.03 million $2.17 12.76
Navient $4.97 billion 0.74 $681.00 million $1.81 7.74

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

Summary

Navient beats Regional Management on 10 of the 16 factors compared between the two stocks.

About Regional Management

Regional Management Corp. is a diversified consumer finance company. The Company provides an array of loan products primarily to customers with limited access to consumer credit from banks, thrifts, credit card companies and other traditional lenders. Its products include small loans, large loans, automobile loans, retail loans, and optional payment and collateral protection insurance products. It offers small loans ranging from $500 to $2,500, through its branches. It offers large installment loans with cash proceeds to the customer ranging from $2,501 to $20,000. As of December 31, 2016, automobile loans were offered in amounts up to $27,500. As of December 31, 2016, retail loans were indirect installment loans structured as retail installment sales contracts that were offered in amounts of up to $7,500. Optional Payment and Collateral Protection Insurance Products offer customers a number of optional payment and collateral protection insurance products.

About Navient

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.

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