Navient (NASDAQ:NAVI – Get Free Report) and Encore Capital Group (NASDAQ:ECPG – Get Free Report) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, risk, earnings, valuation and analyst recommendations.
Analyst Recommendations
This is a summary of recent recommendations for Navient and Encore Capital Group, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Navient | 4 | 4 | 0 | 1 | 1.78 |
| Encore Capital Group | 0 | 0 | 3 | 1 | 3.25 |
Navient presently has a consensus price target of $13.06, indicating a potential upside of 1.65%. Encore Capital Group has a consensus price target of $62.67, indicating a potential upside of 43.90%. Given Encore Capital Group’s stronger consensus rating and higher probable upside, analysts plainly believe Encore Capital Group is more favorable than Navient.
Earnings & Valuation
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Navient | $4.43 billion | 0.29 | $131.00 million | $0.31 | 41.45 |
| Encore Capital Group | $1.32 billion | 0.76 | -$139.24 million | ($3.74) | -11.64 |
Navient has higher revenue and earnings than Encore Capital Group. Encore Capital Group is trading at a lower price-to-earnings ratio than Navient, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
97.1% of Navient shares are held by institutional investors. 31.2% of Navient shares are held by insiders. Comparatively, 2.5% of Encore Capital Group shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
Profitability
This table compares Navient and Encore Capital Group’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Navient | 0.89% | 4.08% | 0.21% |
| Encore Capital Group | -6.07% | 19.61% | 3.47% |
Risk and Volatility
Navient has a beta of 1.35, indicating that its share price is 35% more volatile than the S&P 500. Comparatively, Encore Capital Group has a beta of 1.52, indicating that its share price is 52% more volatile than the S&P 500.
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.
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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