Critical Analysis: SLM (NASDAQ:SLM) and PPDAI Group (NYSE:FINV)

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

Profitability

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

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

Analyst Ratings

This is a breakdown of recent ratings and target prices for SLM and PPDAI Group, as provided by MarketBeat.com.

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

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

Volatility and Risk

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

Valuation and Earnings

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

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

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.

Insider and Institutional Ownership

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

Summary

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

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.

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.