SLM (NASDAQ:SLM) vs. Aaron’s (NYSE:PRG) Financial Analysis

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

Dividends

SLM pays an annual dividend of $0.52 per share and has a dividend yield of 2.1%. Aaron’s pays an annual dividend of $0.52 per share and has a dividend yield of 1.7%. SLM pays out 26.1% of its earnings in the form of a dividend. Aaron’s pays out 10.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. SLM has raised its dividend for 1 consecutive years and Aaron’s has raised its dividend for 2 consecutive years.

Valuation and Earnings

This table compares SLM and Aaron’s”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SLM	$2.62 billion	2.01	$608.33 million	$1.99	12.66
Aaron’s	$2.46 billion	0.50	$197.25 million	$5.06	6.14

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

Volatility & Risk

SLM has a beta of 1.11, indicating that its stock price is 11% more volatile than the S&P 500. Comparatively, Aaron’s has a beta of 1.79, indicating that its stock price is 79% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and recommmendations for SLM and Aaron’s, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SLM	0	3	7	0	2.70
Aaron’s	1	2	4	1	2.63

SLM presently has a consensus target price of $33.89, suggesting a potential upside of 34.53%. Aaron’s has a consensus target price of $41.50, suggesting a potential upside of 33.48%. Given SLM’s stronger consensus rating and higher possible upside, analysts clearly believe SLM is more favorable than Aaron’s.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
SLM	15.46%	21.93%	1.49%
Aaron’s	8.53%	22.54%	9.98%

Institutional & Insider Ownership

98.9% of SLM shares are held by institutional investors. Comparatively, 97.9% of Aaron’s shares are held by institutional investors. 1.3% of SLM shares are held by insiders. Comparatively, 3.2% of Aaron’s shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Summary

SLM beats Aaron’s on 10 of the 18 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 Aaron’s

PROG Holdings, Inc. (NYSE:PRG) is a financial technology holding company based in Salt Lake City, Utah with three business segments: Progressive Leasing, which offers lease-to-own transactions primarily to credit-challenged consumers through e-commerce and point-of-sale retail partners, via online, mobile, and in-store solutions; Vive Financial, which provides consumers who may not qualify for traditional prime lending with a variety of second-look, revolving credit products through private label and branded credit cards; and Four Technologies, which provides consumers of all credit backgrounds Buy Now, Pay Later (BNPL) options through four interest-free installments via its platform, Four.