World Acceptance Corporation (NASDAQ: WRLD) and Discover Financial Services (NYSE:DFS) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their dividends, valuation, risk, earnings, profitability, institutional ownership and analyst recommendations.

Risk and Volatility

World Acceptance Corporation has a beta of 2.34, meaning that its share price is 134% more volatile than the S&P 500. Comparatively, Discover Financial Services has a beta of 1.45, meaning that its share price is 45% more volatile than the S&P 500.

Profitability

This table compares World Acceptance Corporation and Discover Financial Services’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
World Acceptance Corporation 13.13% 15.75% 8.48%
Discover Financial Services 20.91% 21.28% 2.46%

Dividends

Discover Financial Services pays an annual dividend of $1.40 per share and has a dividend yield of 2.4%. World Acceptance Corporation does not pay a dividend. Discover Financial Services pays out 24.2% of its earnings in the form of a dividend. World Acceptance Corporation has increased its dividend for 6 consecutive years.

Analyst Ratings

This is a summary of current ratings for World Acceptance Corporation and Discover Financial Services, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
World Acceptance Corporation 3 0 0 0 1.00
Discover Financial Services 1 7 15 0 2.61

World Acceptance Corporation presently has a consensus target price of $52.33, suggesting a potential downside of 33.74%. Discover Financial Services has a consensus target price of $73.61, suggesting a potential upside of 23.86%. Given Discover Financial Services’ stronger consensus rating and higher possible upside, analysts plainly believe Discover Financial Services is more favorable than World Acceptance Corporation.

Institutional and Insider Ownership

91.9% of World Acceptance Corporation shares are owned by institutional investors. Comparatively, 86.2% of Discover Financial Services shares are owned by institutional investors. 27.3% of World Acceptance Corporation shares are owned by company insiders. Comparatively, 1.0% of Discover Financial Services shares are owned by company 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.

Earnings & Valuation

This table compares World Acceptance Corporation and Discover Financial Services’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
World Acceptance Corporation $533.56 million 1.29 $136.07 million $7.98 9.90
Discover Financial Services $7.17 billion 3.09 $2.16 billion $5.79 10.26

Discover Financial Services has higher revenue and earnings than World Acceptance Corporation. World Acceptance Corporation is trading at a lower price-to-earnings ratio than Discover Financial Services, indicating that it is currently the more affordable of the two stocks.

Summary

Discover Financial Services beats World Acceptance Corporation on 10 of the 17 factors compared between the two stocks.

About World Acceptance Corporation

World Acceptance Corporation operates a small-loan consumer finance business in 15 states and Mexico as of March 31, 2016. The Company offers short-term small installment loans, medium-term larger installment loans, related credit insurance and ancillary products and services to individuals. The Company offers standardized installment loans generally between $300 and $4,000 through 1,339 branches in Alabama, Georgia, Idaho, Illinois, Indiana, Kentucky, Louisiana, Mississippi, Missouri, New Mexico, Oklahoma, South Carolina, Texas, Tennessee, Wisconsin and Mexico as of March 31, 2016. The Company generally serves individuals with limited access to other sources of consumer credit, such as banks, credit unions, other consumer finance businesses and credit card lenders. In the United States branches, the Company also offers income tax return preparation services to its loan customers and other individuals.

About Discover Financial Services

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.

Receive News & Ratings for World Acceptance Corporation Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for World Acceptance Corporation and related companies with MarketBeat.com's FREE daily email newsletter.