Critical Review: GAMCO Investors (NYSE:GAMI) and Navient (NASDAQ:NAVI)

Navient (NASDAQ:NAVI) and GAMCO Investors (NYSE:GAMI) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their risk, institutional ownership, dividends, valuation, earnings, profitability and analyst recommendations.

Dividends

Navient pays an annual dividend of $0.64 per share and has a dividend yield of 4.7%. GAMCO Investors pays an annual dividend of $0.16 per share and has a dividend yield of 0.6%. Navient pays out 55.2% of its earnings in the form of a dividend. GAMCO Investors pays out 6.1% 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.

Profitability

This table compares Navient and GAMCO Investors’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Navient	2.96%	6.69%	0.33%
GAMCO Investors	27.86%	36.01%	23.05%

Insider and Institutional Ownership

97.1% of Navient shares are owned by institutional investors. Comparatively, 3.3% of GAMCO Investors shares are owned by institutional investors. 28.0% of Navient shares are owned by company insiders. Comparatively, 81.2% of GAMCO Investors shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Volatility and Risk

Navient has a beta of 1.43, suggesting that its stock price is 43% more volatile than the S&P 500. Comparatively, GAMCO Investors has a beta of 0.96, suggesting that its stock price is 4% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings for Navient and GAMCO Investors, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Navient	2	3	0	1	2.00
GAMCO Investors	0	0	0	0	0.00

Navient presently has a consensus price target of $13.90, suggesting a potential upside of 2.73%. Given Navient’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Navient is more favorable than GAMCO Investors.

Valuation & Earnings

This table compares Navient and GAMCO Investors”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Navient	$961.00 million	1.51	$131.00 million	$1.16	11.66
GAMCO Investors	$231.40 million	2.61	$60.21 million	$2.64	9.44

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

Summary

Navient beats GAMCO Investors on 9 of the 16 factors compared between the two stocks.

About Navient

Navient Corporation provides technology-enabled education finance and business processing solutions for education, health care, and government clients in the United States. It operates through three segments: Federal Education Loans, Consumer Lending, and Business Processing. The company owns Federal Family Education Loan Program (FFELP) loans that are insured or guaranteed by state or not-for-profit agencies; and performs servicing on its portfolios, as well as federal education loans held by other institutions. It also owns, originates, and services refinance and in-school private education loans; and offers business processing solutions, such as omnichannel contact center, workflow processing, and revenue cycle optimization services to federal agencies, state governments, tolling and parking authorities, other public sector clients, as well as hospitals, hospital systems, medical centers, large physician groups, other healthcare providers, and public health departments. In addition, the company provides corporate liquidity portfolio services. Navient Corporation was founded in 1973 and is headquartered in Herndon, Virginia.

About GAMCO Investors

GAMCO Investors, Inc. is a publicly owned holding investment manager. The firm also provides wealth management, investment advisory, institutional research, brokerage, dealer, underwriting, and distribution services to its clients. It provides its services to individuals including high net worth individuals, corporate pension and profit-sharing plans, foundations, endowments, jointly trust plans, municipalities, and investment companies. The firm, through its subsidiaries, manages separate client-focused equity, fixed income, and balanced portfolios. It also launches equity, fixed income, and balanced mutual funds and manages equity mutual funds for its clients. Through its subsidiaries the firm invests in the public equity and fixed income markets across the globe. It invests in value stocks of companies. The firm employs fundamental analysis with a focus on bottom-up stock picking approach to create its portfolios. It conducts in-house research to make its investments. The firm was founded in 1976 and is based in Rye, New York with additional offices in Greenwich, Connecticut; Bannockburn, Illinois; and Tokyo, Japan. GAMCO Investors, Inc. operates as a subsidiary of Ggcp Holdings Llc.