American Capital (ACAS) and Apollo Global Management (APO) Critical Survey

American Capital (NASDAQ: ACAS) and Apollo Global Management (NYSE:APO) are both financials companies, but which is the superior stock? We will compare the two businesses based on the strength of their earnings, analyst recommendations, valuation, risk, dividends, institutional ownership and profitabiliy.

Volatility and Risk

American Capital has a beta of 1, indicating that its stock price has a similar volatility profile to the S&P 500.Comparatively, Apollo Global Management has a beta of 1.21, indicating that its stock price is 21% more volatile than the S&P 500.

Dividends

Apollo Global Management pays an annual dividend of $1.96 per share and has a dividend yield of 7.2%. American Capital does not pay a dividend. Apollo Global Management pays out 64.7% of its earnings in the form of a dividend.

Valuation & Earnings

This table compares American Capital and Apollo Global Management’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
American Capital N/A N/A N/A ($0.12) -149.90
Apollo Global Management $2.44 billion 2.14 $578.73 million $3.03 9.01

Apollo Global Management has higher revenue and earnings than American Capital. American Capital is trading at a lower price-to-earnings ratio than Apollo Global Management, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

65.7% of American Capital shares are owned by institutional investors. Comparatively, 74.7% of Apollo Global Management shares are owned by institutional investors. 9.2% of American Capital shares are owned by insiders. Comparatively, 4.1% of Apollo Global Management shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares American Capital and Apollo Global Management’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
American Capital 150.00% 12.58% 11.27%
Apollo Global Management 23.30% 72.89% 23.32%

Analyst Ratings

This is a summary of recent ratings for American Capital and Apollo Global Management, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
American Capital 0 1 0 0 2.00
Apollo Global Management 0 2 9 0 2.82

American Capital presently has a consensus price target of $17.50, suggesting a potential downside of 2.72%. Apollo Global Management has a consensus price target of $25.20, suggesting a potential downside of 7.69%. Given American Capital’s higher possible upside, analysts plainly believe American Capital is more favorable than Apollo Global Management.

Summary

Apollo Global Management beats American Capital on 9 of the 13 factors compared between the two stocks.

American Capital Company Profile

Acas LLC., formerly American Capital, Ltd. (American Capital) is a global asset manager and private equity firm. American Capital, both directly and through its asset management business, originates, underwrites and manages investments in middle market private equity, leveraged finance, real estate, energy and structured products. It primarily invests in senior and mezzanine debt and equity in buyouts of private companies sponsored by the Company (American Capital One Stop Buyouts) or sponsored by other private equity funds and provide capital directly to early-stage and mature private and small public companies (Sponsor Finance and Other Investments). It also invests in first and second lien floating rate loans to the United States-based companies (Senior Floating Rate Loans or SFRL) and structured finance investments (Structured Products), including collateralized loan obligation (CLO) securities and commercial mortgages, and commercial mortgage backed securities (CMBS).

Apollo Global Management Company Profile

Apollo Global Management, LLC (Apollo) is an alternative investment manager in private equity, credit and real estate. The Company raises, invests and manages funds on behalf of pension, endowment and sovereign wealth funds, as well as other institutional and individual investors. The Company’s segments include private equity, credit and real estate. The private equity segment invests in control equity and related debt instruments, convertible securities and distressed debt investments. The credit segment invests in non-control corporate and structured debt instruments, including performing, stressed and distressed investments across the capital structure. The real estate segment invests in real estate equity for the acquisition and recapitalization of real estate assets, portfolios, platforms and operating companies, and real estate debt, including first mortgage and mezzanine loans, preferred equity and commercial mortgage backed securities.

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