PRA vs CME Which Should You Buy?

PRA Group Inc. (PRA) and CME Group Inc. (CME) are two major players in the financial sector with differing business models. PRA specializes in the acquisition and management of non-performing loans, while CME operates as a leading derivatives marketplace. Investors evaluating these stocks must consider the unique risks and opportunities associated with each company. PRA's profitability may be impacted by economic downturns, while CME's revenue is tied to trading volumes. Both stocks offer potential for growth and income, but careful analysis is essential for making informed investment decisions.

PRA or CME?

When comparing PRA and CME, 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 PRA and CME.

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. PRA has a dividend yield of -%, while CME has a dividend yield of 4.85%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. PRA reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%. On the other hand, CME reports a 5-year dividend growth of 16.23% year and a payout ratio of 91.69%.

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 PRA P/E ratio at 21.85 and CME's P/E ratio at 23.65. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. PRA P/B ratio is 0.78 while CME's P/B ratio is 2.88.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, PRA has seen a 5-year revenue growth of 0.09%, while CME's is 0.23%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with PRA's ROE at 3.72% and CME's ROE at 12.51%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $23.91 for PRA and $225.59 for CME. Over the past year, PRA's prices ranged from $15.63 to $31.43, with a yearly change of 101.09%. CME's prices fluctuated between $190.70 and $230.36, with a yearly change of 20.80%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.