Reviewing PPDAI Group (NYSE:FINV) and SLM (NASDAQ:SLM)

PPDAI Group (NYSE:FINV) and SLM (NASDAQ:SLM) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their risk, profitability, earnings, dividends, analyst recommendations, valuation and institutional ownership.

Analyst Recommendations

This is a summary of recent recommendations for PPDAI Group and SLM, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PPDAI Group	1	1	0	0	1.50
SLM	1	6	5	0	2.33

PPDAI Group currently has a consensus price target of $4.10, indicating a potential upside of 24.81%. SLM has a consensus price target of $29.80, indicating a potential upside of 12.28%. Given PPDAI Group’s higher possible upside, research analysts plainly believe PPDAI Group is more favorable than SLM.

Profitability

This table compares PPDAI Group and SLM’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PPDAI Group	14.49%	12.31%	7.95%
SLM	26.09%	33.81%	2.51%

Institutional and Insider Ownership

31.1% of PPDAI Group shares are owned by institutional investors. Comparatively, 98.9% of SLM shares are owned by institutional investors. 44.0% of PPDAI Group shares are owned by company insiders. Comparatively, 1.4% of SLM shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares PPDAI Group and SLM”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PPDAI Group	$1.94 billion	0.41	$363.56 million	$1.06	3.10
SLM	$2.63 billion	1.90	$744.85 million	$3.58	7.41

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

Volatility and Risk

PPDAI Group has a beta of 0.34, meaning that its share price is 66% less volatile than the S&P 500. Comparatively, SLM has a beta of 0.96, meaning that its share price is 4% less volatile than the S&P 500.

Summary

SLM beats PPDAI Group on 11 of the 14 factors compared between the two stocks.

About PPDAI Group

FinVolution Group operates in the online consumer finance industry. The company operates a fintech platform that is empowered by borrowers with financial institutions. It operates in China and internationally. The company was formerly known as PPDAI Group Inc. and changed its name to FinVolution Group in November 2019. FinVolution Group was founded in 2007 and is headquartered in Shanghai, the People’s Republic of China.

About SLM

SLM Corporation, through its subsidiaries, originates and services private education loans to students and their families to finance the cost of their education in the United States. It is also involved in the provision of retail deposit accounts, including certificates of deposit, money market accounts, and high-yield savings accounts; and interest-bearing omnibus accounts. The company was formerly known as New BLC Corporation and changed its name to SLM Corporation in December 2013. SLM Corporation was founded in 1972 and is headquartered in Newark, Delaware.