Navient vs Nelnet Which Offers More Value?

Navient and Nelnet are two prominent companies in the student loan servicing industry, each offering unique investment opportunities for those looking to capitalize on the growing demand for education financing. Navient, with its focus on loan servicing and debt collection, has faced criticism and legal battles in recent years, impacting its stock performance. On the other hand, Nelnet, a diversified financial services company, has shown more stability and growth potential. Investors should carefully evaluate the risks and rewards associated with investing in Navient versus Nelnet stocks.

Navient or Nelnet?

When comparing Navient and Nelnet, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Navient and Nelnet.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Navient has a dividend yield of 5.2%, while Nelnet has a dividend yield of 1.0%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Navient reports a 5-year dividend growth of 0.00% year and a payout ratio of 38.71%. On the other hand, Nelnet reports a 5-year dividend growth of 9.94% year and a payout ratio of 36.55%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Navient P/E ratio at 8.93 and Nelnet's P/E ratio at 36.23. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Navient P/B ratio is 0.62 while Nelnet's P/B ratio is 1.24.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Navient has seen a 5-year revenue growth of 4.34%, while Nelnet's is 1.31%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Navient's ROE at 6.79% and Nelnet's ROE at 3.42%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $15.20 for Navient and $110.75 for Nelnet. Over the past year, Navient's prices ranged from $13.71 to $19.68, with a yearly change of 43.54%. Nelnet's prices fluctuated between $82.22 and $127.32, with a yearly change of 54.85%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.