Reviewing Santander Consumer USA (SC) & SLM (SLM)

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

Volatility & Risk

Santander Consumer USA has a beta of 1.32, meaning that its share price is 32% more volatile than the S&P 500. Comparatively, SLM has a beta of 1.33, meaning that its share price is 33% more volatile than the S&P 500.

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 & Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Santander Consumer USA $6.53 billion 0.98 $766.46 million $1.86 9.58
SLM $1.15 billion 4.42 $250.32 million $0.67 17.51

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.

Institutional & Insider Ownership

91.4% of Santander Consumer USA shares are held by institutional investors. Comparatively, 99.3% of SLM shares are held by institutional investors. 0.4% of Santander Consumer USA shares are held by company insiders. Comparatively, 0.6% of SLM shares are held by company 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

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 Recommendations

This is a breakdown of current ratings and recommmendations for Santander Consumer USA and SLM, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Santander Consumer USA 0 5 9 0 2.64
SLM 1 1 6 0 2.63

Santander Consumer USA presently has a consensus target price of $17.36, suggesting a potential downside of 2.60%. SLM has a consensus target price of $13.50, suggesting a potential upside of 15.09%. Given SLM’s higher possible upside, analysts clearly believe SLM is more favorable than Santander Consumer USA.

Summary

SLM beats Santander Consumer USA on 9 of the 15 factors compared between the two stocks.

About Santander Consumer USA

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.

About SLM

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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