Reviewing Capital One Financial (NYSE:COF) and SLM (NASDAQ:SLM)

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

Profitability

This table compares SLM and Capital One Financial’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%
Capital One Financial	N/A	10.01%	1.40%

Volatility & Risk

SLM has a beta of 1.13, suggesting that its share price is 13% more volatile than the S&P 500. Comparatively, Capital One Financial has a beta of 1.16, suggesting that its share price is 16% more volatile than the S&P 500.

Insider & Institutional Ownership

98.9% of SLM shares are owned by institutional investors. Comparatively, 89.8% of Capital One Financial shares are owned by institutional investors. 1.3% of SLM shares are owned by insiders. Comparatively, 1.3% of Capital One Financial shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

SLM pays an annual dividend of $0.52 per share and has a dividend yield of 1.6%. Capital One Financial pays an annual dividend of $2.40 per share and has a dividend yield of 1.1%. SLM pays out 26.1% of its earnings in the form of a dividend. Capital One Financial pays out 123.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. SLM has increased its dividend for 1 consecutive years. SLM is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current ratings and recommmendations for SLM and Capital One Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SLM	0	1	9	0	2.90
Capital One Financial	0	4	13	3	2.95

SLM presently has a consensus target price of $35.00, suggesting a potential upside of 10.31%. Capital One Financial has a consensus target price of $238.8125, suggesting a potential upside of 7.95%. Given SLM’s higher probable upside, equities analysts plainly believe SLM is more favorable than Capital One Financial.

Earnings & Valuation

This table compares SLM and Capital One Financial”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SLM	$2.62 billion	2.53	$608.33 million	$1.99	15.94
Capital One Financial	$53.94 billion	2.62	$4.75 billion	$1.95	113.44

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

Summary

SLM beats Capital One Financial 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 Capital One Financial

Capital One Financial Corporation operates as the financial services holding company for the Capital One, National Association, which engages in the provision of various financial products and services in the United States, Canada, and the United Kingdom. It operates through three segments: Credit Card, Consumer Banking, and Commercial Banking. The company accepts checking accounts, money market deposits, negotiable order of withdrawals, savings deposits, and time deposits. Its loan products include credit card loans; auto and retail banking loans; and commercial and multifamily real estate, and commercial and industrial loans. The company also offers credit and debit card products; online direct banking services; and provides advisory, capital markets, treasury management, and depository services. It serves consumers, small businesses, and commercial clients through digital channels, branches, cafés, and other distribution channels located in New York, Louisiana, Texas, Maryland, Virginia, New Jersey, and California. The company was founded in 1988 and is headquartered in McLean, Virginia.