Ally Financial (NYSE: ALLY) and Navient Corp (NASDAQ:NAVIV) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, dividends, profitabiliy, earnings, institutional ownership, risk and analyst recommendations.

Dividends

Ally Financial pays an annual dividend of $0.32 per share and has a dividend yield of 1.6%. Navient Corp does not pay a dividend. Ally Financial pays out 15.1% of its earnings in the form of a dividend.

Institutional & Insider Ownership

99.2% of Ally Financial shares are held by institutional investors. 0.2% of Ally Financial shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Ally Financial and Navient Corp’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Ally Financial $6.06 billion 1.60 $1.02 billion $2.12 9.53
Navient Corp N/A N/A N/A N/A N/A

Ally Financial has higher revenue and earnings than Navient Corp.

Profitability

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

Net Margins Return on Equity Return on Assets
Ally Financial 15.68% 7.63% 0.64%
Navient Corp 25.88% 9.61% 0.30%

Analyst Ratings

This is a summary of current ratings and target prices for Ally Financial and Navient Corp, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ally Financial 0 4 12 0 2.75
Navient Corp 0 0 0 0 N/A

Ally Financial presently has a consensus price target of $25.08, indicating a potential upside of 24.17%. Given Ally Financial’s higher probable upside, research analysts plainly believe Ally Financial is more favorable than Navient Corp.

Summary

Ally Financial beats Navient Corp on 7 of the 10 factors compared between the two stocks.

Ally Financial Company Profile

Ally Financial Inc. is a digital financial services company. The Company is a bank and financial holding company. Its segments include Automotive Finance operations, Insurance operations, Mortgage Finance operations, Corporate Finance operations, and Corporate and Other. The Automotive Finance operations segment provides the United States-based automotive financing services to consumers and automotive dealers, and automotive and equipment financing services to companies and municipalities. The Insurance operations segment offers both consumer finance protection and insurance products sold through the automotive dealer channel, and commercial insurance products sold directly to dealers. The Mortgage Finance operations segment consists of the management of a held-for-investment consumer mortgage finance loan portfolio. The Corporate Finance operations segment provides senior secured leveraged cash flow and asset-based loans to mostly the United States-based middle market companies.

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.

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