Nelnet (NYSE:NNI) versus Aaron’s (NYSE:PRG) Financial Analysis

Nelnet (NYSE:NNI) and Aaron’s (NYSE:PRG) are both finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, profitability, analyst recommendations, dividends, earnings, risk and valuation.

Risk & Volatility

Nelnet has a beta of 0.95, meaning that its share price is 5% less volatile than the S&P 500. Comparatively, Aaron’s has a beta of 1.76, meaning that its share price is 76% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Nelnet	9.44%	6.00%	1.39%
Aaron’s	8.38%	23.11%	9.88%

Dividends

Nelnet pays an annual dividend of $1.12 per share and has a dividend yield of 0.9%. Aaron’s pays an annual dividend of $0.52 per share and has a dividend yield of 1.7%. Nelnet pays out 21.2% of its earnings in the form of a dividend. Aaron’s pays out 10.7% 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. Aaron’s has raised its dividend for 2 consecutive years. Aaron’s is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares Nelnet and Aaron’s”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Nelnet	$2.14 billion	2.08	$184.04 million	$5.29	23.14
Aaron’s	$2.46 billion	0.50	$197.25 million	$4.88	6.25

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

Insider & Institutional Ownership

33.5% of Nelnet shares are owned by institutional investors. Comparatively, 97.9% of Aaron’s shares are owned by institutional investors. 50.9% of Nelnet shares are owned by insiders. Comparatively, 3.2% of Aaron’s shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Nelnet and Aaron’s, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Nelnet	0	1	0	0	2.00
Aaron’s	0	1	4	1	3.00

Nelnet presently has a consensus price target of $98.00, indicating a potential downside of 19.93%. Aaron’s has a consensus price target of $44.83, indicating a potential upside of 46.90%. Given Aaron’s’ stronger consensus rating and higher probable upside, analysts clearly believe Aaron’s is more favorable than Nelnet.

Summary

Aaron’s beats Nelnet on 13 of the 18 factors compared between the two stocks.

About Nelnet

Nelnet, Inc. engages in loan servicing, communications, education technology, services, and payment processing businesses worldwide. The Loan Servicing and Systems segment provides loan conversion, application processing, borrower updates, customer service, payment processing, due diligence procedures, funds management reconciliation, and claim processing services. This segment also offers student loan servicing software; business process outsourcing services specialized in contact center management, such as inbound calls, outreach campaigns and sales, and interacting with customers through multi-channels, and processing and technology services. The Education Technology Services and Payments segment provides financial management services; school information system software; website design and cost-effective admissions software; FACTS Giving, a donation platform; and customized professional development and coaching services, educational instruction services, and technology products that aid in teacher and student evaluations. This segment also offers tuition payment plans, and service and technology for student billings, payments, and refunds; solutions for in-person, online, and mobile payment experiences on campus; payment processing services, such as credit card and electronic transfer; faith community, giving, and learning management services and technologies; and an integrated commerce payment platform, financial management, and tuition payment plan services, as well as a school management platform that provides administrative, information and financial management, and communication functions for K-12 schools. The Asset Generation and Management segment acquires, manages, and owns loan assets. The Nelnet Bank segment operates as an internet industrial bank. It also offers investment advisory, insurance, and reinsurance services, as well as engages in real estate investment business. The company was incorporated in 1977 and is headquartered in Lincoln, Nebraska.

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.