TD Ameritrade (AMTD) versus Navient (NAVI) Critical Analysis

TD Ameritrade (NASDAQ: AMTD) and Navient (NASDAQ:NAVI) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, valuation, dividends, risk, profitability, analyst recommendations and institutional ownership.

Profitability

This table compares TD Ameritrade and Navient’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
TD Ameritrade 22.02% 19.66% 3.72%
Navient 6.43% 13.91% 0.43%



Analyst Recommendations

This is a summary of recent ratings and recommmendations for TD Ameritrade and Navient, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TD Ameritrade 1 4 13 0 2.67
Navient 1 4 6 0 2.45

TD Ameritrade currently has a consensus price target of $64.18, indicating a potential upside of 6.45%. Navient has a consensus price target of $16.72, indicating a potential upside of 23.57%. Given Navient’s higher probable upside, analysts plainly believe Navient is more favorable than TD Ameritrade.

Dividends

TD Ameritrade pays an annual dividend of $0.84 per share and has a dividend yield of 1.4%. Navient pays an annual dividend of $0.64 per share and has a dividend yield of 4.7%. TD Ameritrade pays out 45.7% of its earnings in the form of a dividend. Navient pays out 35.8% 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. Navient is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

91.8% of TD Ameritrade shares are owned by institutional investors. Comparatively, 98.4% of Navient shares are owned by institutional investors. 0.4% of TD Ameritrade shares are owned by insiders. Comparatively, 1.9% of Navient shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings & Valuation

This table compares TD Ameritrade and Navient’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
TD Ameritrade $3.68 billion 9.31 $872.00 million $1.84 32.77
Navient $5.18 billion 0.69 $292.00 million $1.79 7.56

TD Ameritrade has higher earnings, but lower revenue than Navient. Navient is trading at a lower price-to-earnings ratio than TD Ameritrade, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

TD Ameritrade has a beta of 1.33, meaning that its share price is 33% more volatile than the S&P 500. Comparatively, Navient has a beta of 2.2, meaning that its share price is 120% more volatile than the S&P 500.

Summary

TD Ameritrade beats Navient on 9 of the 16 factors compared between the two stocks.

About TD Ameritrade

TD Ameritrade Holding Corporation provides securities brokerage and related technology-based financial services to retail investors, traders, and independent registered investment advisors (RIAs) in the United States. Its products and services include tdameritrade.com, a Web platform for self-directed retail investors; Trade Architect, a Web-based platform for investors and traders to identify opportunities and stay informed; thinkorswim, a desktop platform for traders; and TD Ameritrade Mobile, which allows on-the-go investors and traders to trade and monitor accounts. The company also offers TD Ameritrade Institutional that provides brokerage and custody services to approximately 6,000 independent RIAs and their clients; TD Ameritrade Education, which allows investor education for stocks, options, income investing, and portfolio management; TD Ameritrade's Goal Planning that offers investment consulting and planning services; Selective Portfolios, an advisory service, which develops portfolios of exchange-traded funds (ETFs) and mutual funds; AdvisorDirect, a national referral service for investors; TD Ameritrade Singapore Pte. Ltd. that enables retail investors in Singapore to trade the U.S. markets; and TD Ameritrade Corporate Services, which provide self-directed brokerage services to employees of corporations. In addition, it offers various retail brokerage products and services, such as common and preferred stocks; ETFs; options; futures; foreign exchange; mutual funds; fixed income products; primary and secondary offerings of fixed income securities, closed-end funds, and preferred stocks; margin lending; cash management services; and annuities. The company provides its services primarily through the Internet, a network of retail branches, mobile trading applications, interactive voice response, and registered representatives through telephone. TD Ameritrade Holding Corporation was founded in 1971 and is headquartered in Omaha, Nebraska.

About Navient

Navient Corporation provides asset management and business processing services to education, health care, and government clients at the federal, state, and local levels in the United States. The company operates in three segments: Federal Family Education Loan Program (FFELP) Loans, Private Education Loans, and Business Services. It holds the portfolio of education loans insured or guaranteed under the FFELP, as well as the portfolio of private education loans; and originates private education refinance loans. The company also services education loans owned by the United States Department of Education, financial institutions, and nonprofit education lenders. In addition, it offers asset recovery services for loans and receivables on behalf of guarantors of FFELP loans and higher education institutions. Further, the company provides asset recovery and other business processing services for federal, state, court, and municipal clients; public authorities; and health care organizations. Navient Corporation was founded in 1973 and is headquartered in Wilmington, Delaware.

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