The Advisory Board (NASDAQ: ABCO) and Nelnet (NYSE:NNI) are both mid-cap medical companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, risk, valuation, dividends, profitability, analyst recommendations and institutional ownership.
Earnings & Valuation
This table compares The Advisory Board and Nelnet’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|The Advisory Board||$799.15 million||2.74||$120.83 million||$2.69||20.04|
|Nelnet||$861.56 million||2.84||$255.88 million||$6.16||9.55|
Nelnet has higher revenue and earnings than The Advisory Board. Nelnet is trading at a lower price-to-earnings ratio than The Advisory Board, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
40.8% of Nelnet shares are held by institutional investors. 4.7% of The Advisory Board shares are held by company insiders. Comparatively, 45.4% of Nelnet shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
This is a breakdown of current ratings and price targets for The Advisory Board and Nelnet, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|The Advisory Board||1||11||3||0||2.13|
The Advisory Board presently has a consensus price target of $51.44, indicating a potential downside of 4.56%. Nelnet has a consensus price target of $53.50, indicating a potential downside of 9.09%. Given The Advisory Board’s higher possible upside, research analysts plainly believe The Advisory Board is more favorable than Nelnet.
Nelnet pays an annual dividend of $0.56 per share and has a dividend yield of 1.0%. The Advisory Board does not pay a dividend. Nelnet pays out 9.1% of its earnings in the form of a dividend.
Risk & Volatility
The Advisory Board has a beta of 1.33, suggesting that its share price is 33% more volatile than the S&P 500. Comparatively, Nelnet has a beta of 1, suggesting that its share price has a similar volatility profile to the S&P 500.
This table compares The Advisory Board and Nelnet’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|The Advisory Board||13.65%||12.69%||3.30%|
Nelnet beats The Advisory Board on 9 of the 16 factors compared between the two stocks.
About The Advisory Board
The Advisory Board Company is a provider of software and solutions to the healthcare and higher education industries. The Company offers subscription-based membership programs, software and data-enabled services. All of its programs are rooted in best practices and extends across four areas, including Best practices research, Technology, Data-enabled services and Consulting services. The best practices research and insight programs provide the foundation for all of its other programs. The Company offers technology analytics programs anchored by cloud-based software applications that surface performance improvement opportunities to accelerate progress. Through its consulting services, the Company provides on-the-ground support for performance improvement initiatives, as well as best practice professional management of areas of the hospital or medical group. The Company’s data-enabled services are primarily focused in the area of enrollment management.
Nelnet, Inc. focuses on delivering education-related products and services and student loan asset management. The Company is engaged in student loan servicing, tuition payment processing and school information systems, and communications. The Company’s segments include Loan Systems and Servicing, Tuition Payment Processing and Campus Commerce, Communications, Asset Generation and Management, and Corporate and Other Activities. The Company earns fee-based revenue through its Loan Systems and Servicing, Tuition Payment Processing, and Communications operating segments. In addition, the Company earns interest income on its student loan portfolio in its Asset Generation and Management operating segment. Corporate and Other Activities include real estate and other investments. The Company, through Allo Communications LLC, is engaged in the sale of advanced telecommunication services, including Internet, broadband, telephone, and television services.
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