Critical Comparison: Credit Acceptance (NASDAQ:CACC) vs. Navient (NASDAQ:NAVI)

Credit Acceptance (NASDAQ:CACC) and Navient (NASDAQ:NAVI) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their profitability, institutional ownership, earnings, risk, valuation, analyst recommendations and dividends.

Institutional & Insider Ownership

81.7% of Credit Acceptance shares are owned by institutional investors. Comparatively, 97.1% of Navient shares are owned by institutional investors. 6.6% of Credit Acceptance shares are owned by company insiders. Comparatively, 31.2% of Navient shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Credit Acceptance and Navient”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Credit Acceptance	$2.16 billion	2.50	$247.90 million	$34.69	13.88
Navient	$4.43 billion	0.29	$131.00 million	$0.31	42.10

Credit Acceptance has higher earnings, but lower revenue than Navient. Credit Acceptance is trading at a lower price-to-earnings ratio than Navient, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Credit Acceptance has a beta of 1.13, meaning that its stock price is 13% more volatile than the S&P 500. Comparatively, Navient has a beta of 1.37, meaning that its stock price is 37% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and recommmendations for Credit Acceptance and Navient, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Credit Acceptance	1	1	0	0	1.50
Navient	3	5	0	1	1.89

Credit Acceptance presently has a consensus target price of $440.00, suggesting a potential downside of 8.62%. Navient has a consensus target price of $13.5625, suggesting a potential upside of 3.93%. Given Navient’s stronger consensus rating and higher probable upside, analysts plainly believe Navient is more favorable than Credit Acceptance.

Profitability

This table compares Credit Acceptance and Navient’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Credit Acceptance	18.69%	27.06%	5.08%
Navient	0.89%	4.08%	0.21%

Summary

Navient beats Credit Acceptance on 8 of the 14 factors compared between the two stocks.

About Credit Acceptance

Credit Acceptance Corporation engages in the provision of financing programs, and related products and services in the United States. The company advances money to automobile dealers in exchange for the right to service the underlying consumer loans; and buys the consumer loans from the dealers and keeps the amount collected from the consumers. It is also involved in the business of reinsuring coverage under vehicle service contracts sold to consumers by dealers on vehicles financed by the company. The company serves independent and franchised automobile dealers. Credit Acceptance Corporation was incorporated in 1972 and is headquartered in Southfield, Michigan.

About Navient

Navient Corporation provides technology-enabled education finance and business processing solutions for education, health care, and government clients in the United States. It operates through three segments: Federal Education Loans, Consumer Lending, and Business Processing. The company owns Federal Family Education Loan Program (FFELP) loans that are insured or guaranteed by state or not-for-profit agencies; and performs servicing on its portfolios, as well as federal education loans held by other institutions. It also owns, originates, and services refinance and in-school private education loans; and offers business processing solutions, such as omnichannel contact center, workflow processing, and revenue cycle optimization services to federal agencies, state governments, tolling and parking authorities, other public sector clients, as well as hospitals, hospital systems, medical centers, large physician groups, other healthcare providers, and public health departments. In addition, the company provides corporate liquidity portfolio services. Navient Corporation was founded in 1973 and is headquartered in Herndon, Virginia.