SLM (NASDAQ:SLM) & PPDAI Group (NYSE:FINV) Critical Contrast

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

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	20.43%	26.34%	1.93%

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PPDAI Group	$1.94 billion	0.36	$363.56 million	$1.06	2.71
SLM	$1.79 billion	1.71	$744.85 million	$2.76	6.08

SLM has lower revenue, but higher 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.

Risk & Volatility

PPDAI Group has a beta of 0.31, indicating that its stock price is 69% less volatile than the S&P 500. Comparatively, SLM has a beta of 1.01, indicating that its stock price is 1% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations and price targets for PPDAI Group and SLM, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PPDAI Group	1	1	0	0	1.50
SLM	1	5	5	0	2.36

PPDAI Group currently has a consensus target price of $4.10, suggesting a potential upside of 42.61%. SLM has a consensus target price of $26.44, suggesting a potential upside of 57.60%. Given SLM’s stronger consensus rating and higher possible upside, analysts plainly believe SLM is more favorable than PPDAI Group.

Insider and Institutional Ownership

31.1% of PPDAI Group shares are held by institutional investors. Comparatively, 98.9% of SLM shares are held by institutional investors. 44.0% of PPDAI Group shares are held by company insiders. Comparatively, 1.4% of SLM shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

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

About PPDAI Group

PPDAI Group, now known as FinVolution Group, operates an online consumer finance platform that connects individual borrowers with financial institutions and other funding partners. The company uses technology and data analytics to support borrower assessment, risk management and loan facilitation. Founded in China, the company has expanded beyond its home market into countries in Southeast Asia, including Indonesia and the Philippines. Its platform serves consumers seeking credit and partners seeking technology-enabled access to consumer lending opportunities.

About SLM

SLM Corporation, commonly known as Sallie Mae, is a U.S.-based education finance company. Through Sallie Mae Bank, it primarily provides private student loans to undergraduate and graduate students, as well as loans for career training and other education-related expenses. The company also offers consumer banking products, including savings accounts and certificates of deposit. Its services include supporting borrowers through loan application, repayment and customer service processes. Founded in 1972 as the Student Loan Marketing Association, the organization was later privatized and became known as Sallie Mae.