LendingClub (NYSE:LC – Get Free Report) and PRA Group (NASDAQ:PRAA – Get Free Report) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their earnings, risk, dividends, institutional ownership, profitability, valuation and analyst recommendations.
Risk and Volatility
LendingClub has a beta of 1.98, suggesting that its share price is 98% more volatile than the S&P 500. Comparatively, PRA Group has a beta of 1.13, suggesting that its share price is 13% more volatile than the S&P 500.
Institutional and Insider Ownership
74.1% of LendingClub shares are held by institutional investors. Comparatively, 97.2% of PRA Group shares are held by institutional investors. 3.2% of LendingClub shares are held by company insiders. Comparatively, 2.2% of PRA Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Valuation & Earnings
This table compares LendingClub and PRA Group”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| LendingClub | $1.03 billion | 2.14 | $135.68 million | $1.49 | 12.89 |
| PRA Group | $1.34 billion | 0.55 | -$305.14 million | ($6.73) | -2.90 |
LendingClub has higher earnings, but lower revenue than PRA Group. PRA Group is trading at a lower price-to-earnings ratio than LendingClub, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares LendingClub and PRA Group’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| LendingClub | 16.99% | 11.92% | 1.55% |
| PRA Group | -19.91% | 15.56% | 3.18% |
Analyst Ratings
This is a summary of recent ratings and price targets for LendingClub and PRA Group, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| LendingClub | 0 | 2 | 6 | 1 | 2.89 |
| PRA Group | 1 | 3 | 1 | 0 | 2.00 |
LendingClub currently has a consensus price target of $23.07, indicating a potential upside of 20.10%. PRA Group has a consensus price target of $26.00, indicating a potential upside of 33.40%. Given PRA Group’s higher probable upside, analysts plainly believe PRA Group is more favorable than LendingClub.
Summary
LendingClub beats PRA Group on 10 of the 15 factors compared between the two stocks.
About LendingClub
LendingClub Corporation, operates as a bank holding company, that provides range of financial products and services in the United States. It offers deposit products, including savings accounts, checking accounts, and certificates of deposit. The company also provides loan products, such as consumer loans comprising unsecured personal loans, secured auto refinance loans, and patient and education finance loans; and commercial loans, including small business loans. In addition, it operates an online lending marketplace platform. The company was incorporated in 2006 and is headquartered in San Francisco, California.
About PRA Group
PRA Group, Inc., a financial and business services company, engages in the purchase, collection, and management of portfolios of nonperforming loans worldwide. It is involved in the purchase of accounts that are primarily the unpaid obligations of individuals owed to credit originators, which include banks and other types of consumer, retail, and auto finance companies. The company also acquires nonperforming loans, including Visa and MasterCard credit card accounts, private label and other credit card accounts, personal loans, automobile loans, and small business loans from banks, credit unions, consumer finance companies, retailers, utilities, automobile finance companies, and other credit originators. In addition, it provides fee-based services on class action claims recoveries. The company was formerly known as Portfolio Recovery Associates, Inc. and changed its name to PRA Group, Inc. in October 2014. PRA Group, Inc. was founded in 1996 and is headquartered in Norfolk, Virginia.
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