Nelnet (NYSE:NNI – Get Free Report) and Encore Capital Group (NASDAQ:ECPG – Get Free Report) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, dividends, analyst recommendations, profitability, valuation, risk and earnings.
Insider & Institutional Ownership
33.5% of Nelnet shares are held by institutional investors. 50.9% of Nelnet shares are held by company insiders. Comparatively, 2.6% of Encore Capital Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
Volatility & Risk
Nelnet has a beta of 0.84, indicating that its share price is 16% less volatile than the S&P 500. Comparatively, Encore Capital Group has a beta of 1.48, indicating that its share price is 48% more volatile than the S&P 500.
Earnings & Valuation
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Nelnet | $2.14 billion | 2.13 | $184.04 million | $9.03 | 13.94 |
| Encore Capital Group | $1.32 billion | 0.73 | -$139.24 million | ($3.74) | -11.22 |
Nelnet has higher revenue and earnings than Encore Capital Group. Encore Capital Group is trading at a lower price-to-earnings ratio than Nelnet, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Nelnet and Encore Capital Group’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Nelnet | 14.86% | 10.09% | 2.42% |
| Encore Capital Group | -6.07% | 19.61% | 3.47% |
Analyst Ratings
This is a breakdown of current ratings and target prices for Nelnet and Encore Capital Group, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Nelnet | 0 | 1 | 0 | 0 | 2.00 |
| Encore Capital Group | 1 | 0 | 3 | 1 | 2.80 |
Encore Capital Group has a consensus target price of $62.67, suggesting a potential upside of 49.28%. Given Encore Capital Group’s stronger consensus rating and higher probable upside, analysts plainly believe Encore Capital Group is more favorable than Nelnet.
Summary
Nelnet beats Encore Capital Group on 8 of the 15 factors compared between the two stocks.
About Nelnet
Nelnet, Inc. engages in loan servicing, communications, education technology, services, and payment processing businesses worldwide. The Loan Servicing and Systems segment provides loan conversion, application processing, borrower updates, customer service, payment processing, due diligence procedures, funds management reconciliation, and claim processing services. This segment also offers student loan servicing software; business process outsourcing services specialized in contact center management, such as inbound calls, outreach campaigns and sales, and interacting with customers through multi-channels, and processing and technology services. The Education Technology Services and Payments segment provides financial management services; school information system software; website design and cost-effective admissions software; FACTS Giving, a donation platform; and customized professional development and coaching services, educational instruction services, and technology products that aid in teacher and student evaluations. This segment also offers tuition payment plans, and service and technology for student billings, payments, and refunds; solutions for in-person, online, and mobile payment experiences on campus; payment processing services, such as credit card and electronic transfer; faith community, giving, and learning management services and technologies; and an integrated commerce payment platform, financial management, and tuition payment plan services, as well as a school management platform that provides administrative, information and financial management, and communication functions for K-12 schools. The Asset Generation and Management segment acquires, manages, and owns loan assets. The Nelnet Bank segment operates as an internet industrial bank. It also offers investment advisory, insurance, and reinsurance services, as well as engages in real estate investment business. The company was incorporated in 1977 and is headquartered in Lincoln, Nebraska.
About Encore Capital Group
Encore Capital Group, Inc., a specialty finance company, provides debt recovery solutions and other related services for consumers across financial assets worldwide. The company purchases portfolios of defaulted consumer receivables at deep discounts to face value, as well as manages them by working with individuals as they repay their obligations and works toward financial recovery. It is also involved in the provision of early stage collection, business process outsourcing, and contingent collection services. In addition, the company engages in debt servicing and other portfolio management services to credit originator for non-performing loans. Further, it offers credit management services. Encore Capital Group, Inc. was incorporated in 1999 and is headquartered in San Diego, California.
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