Santander Consumer USA (NYSE: SC) and SLM (NASDAQ:SLM) are both mid-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their risk, profitability, earnings, institutional ownership, analyst recommendations, valuation and dividends.

Dividends

Santander Consumer USA pays an annual dividend of $0.12 per share and has a dividend yield of 0.7%. SLM does not pay a dividend. Santander Consumer USA pays out 6.5% of its earnings in the form of a dividend.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Santander Consumer USA and SLM, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Santander Consumer USA 0 5 7 0 2.58
SLM 1 1 6 0 2.63

Santander Consumer USA currently has a consensus target price of $16.75, indicating a potential downside of 0.59%. SLM has a consensus target price of $13.50, indicating a potential upside of 27.36%. Given SLM’s stronger consensus rating and higher possible upside, analysts plainly believe SLM is more favorable than Santander Consumer USA.

Profitability

This table compares Santander Consumer USA and SLM’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Santander Consumer USA 10.17% 11.33% 1.62%
SLM 22.95% 16.63% 1.62%

Earnings and Valuation

This table compares Santander Consumer USA and SLM’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Santander Consumer USA $6.53 billion 0.93 $766.46 million $1.86 9.06
SLM $1.15 billion 3.99 $250.32 million $0.67 15.82

Santander Consumer USA has higher revenue and earnings than SLM. Santander Consumer USA 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

Santander Consumer USA has a beta of 1.32, suggesting that its share price is 32% more volatile than the S&P 500. Comparatively, SLM has a beta of 1.32, suggesting that its share price is 32% more volatile than the S&P 500.

Insider and Institutional Ownership

90.6% of Santander Consumer USA shares are owned by institutional investors. Comparatively, 96.8% of SLM shares are owned by institutional investors. 0.4% of Santander Consumer USA shares are owned by insiders. Comparatively, 0.6% of SLM shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

SLM beats Santander Consumer USA on 9 of the 14 factors compared between the two stocks.

Santander Consumer USA Company Profile

Santander Consumer USA Holdings Inc. is the holding company for Santander Consumer USA Inc., and subsidiaries, a consumer finance company focused on vehicle finance and third party servicing. The Company operates through Consumer Finance segment. Its Consumer Finance business is focused on vehicle financial products and services, including retail installment contracts, vehicle leases, and dealer loans, as well as financial products and services related to motorcycles, recreational vehicles (RVs), and marine vehicles. It also includes its personal loan and point-of-sale financing operations. The Company’s primary business is the indirect origination and securitization of retail installment contracts, principally through manufacturer-franchised dealers in connection with their sale of new and used vehicles to retail consumers. The Company offers auto financing products and services to Fiat Chrysler Automobiles US LLC (FCA) customers and dealers under the Chrysler Capital brand.

SLM Company Profile

SLM Corporation (Sallie Mae) is the nation’s saving, planning, and paying for college company. Sallie Mae offers products, which promote personal finance including private education loans, Upromise rewards, scholarship search, college financial planning tools, insurance, and online retail banking.

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