Analyzing Federated Investors (FII) and Eaton Vance (EV)

Federated Investors (NYSE: FII) and Eaton Vance (NYSE:EV) are both mid-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, analyst recommendations, earnings, risk, institutional ownership, profitability and dividends.

Earnings & Valuation

This table compares Federated Investors and Eaton Vance’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Federated Investors $1.14 billion 3.20 $208.91 million $2.10 17.26
Eaton Vance $1.53 billion 4.41 $282.13 million $2.42 23.59

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

Analyst Ratings

This is a breakdown of recent ratings and price targets for Federated Investors and Eaton Vance, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Federated Investors 2 6 0 0 1.75
Eaton Vance 0 5 2 0 2.29

Federated Investors currently has a consensus price target of $28.29, suggesting a potential downside of 21.95%. Eaton Vance has a consensus price target of $51.36, suggesting a potential downside of 10.03%. Given Eaton Vance’s stronger consensus rating and higher possible upside, analysts plainly believe Eaton Vance is more favorable than Federated Investors.

Risk & Volatility

Federated Investors has a beta of 1.57, indicating that its share price is 57% more volatile than the S&P 500. Comparatively, Eaton Vance has a beta of 1.89, indicating that its share price is 89% more volatile than the S&P 500.

Profitability

This table compares Federated Investors and Eaton Vance’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Federated Investors 19.32% 34.54% 18.68%
Eaton Vance 18.45% 33.45% 13.84%

Insider & Institutional Ownership

85.2% of Federated Investors shares are owned by institutional investors. Comparatively, 68.7% of Eaton Vance shares are owned by institutional investors. 7.1% of Federated Investors shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

Federated Investors pays an annual dividend of $1.00 per share and has a dividend yield of 2.8%. Eaton Vance pays an annual dividend of $1.24 per share and has a dividend yield of 2.2%. Federated Investors pays out 47.6% of its earnings in the form of a dividend. Eaton Vance pays out 51.2% 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. Eaton Vance has raised its dividend for 36 consecutive years. Federated Investors is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Eaton Vance beats Federated Investors on 10 of the 17 factors compared between the two stocks.

About Federated Investors

Federated Investors, Inc. (Federated) is a provider of investment management products and related financial services. Federated operates through investment management business segment. It is engaged in sponsoring, marketing and providing investment-related services to various investment products, including mutual funds and Separate Accounts, which include separately managed accounts, institutional accounts, sub-advised funds and other managed products. It operates in one segment, the investment management business. As of December 31, 2016, Federated provided investment advisory services to 124 sponsored investment companies and other funds (Federated Funds). It markets these funds to banks, brokers and dealers and other financial intermediaries using them to meet the needs of their customers and clients, including retail investors, corporations and retirement plans. The Company offers a range of products and strategies, including money market, equity and fixed-income investments.

About Eaton Vance

Eaton Vance Corp. is engaged in the business of managing investment funds and providing investment management and advisory services to high-net-worth individuals and institutions. The Company operates as an investment advisor to funds and separate accounts. The Company, through its subsidiaries and other affiliates, manages active equity, income and alternative strategies across a range of investment styles and asset classes, including the United States and global equities, floating-rate bank loans, municipal bonds, global income, high-yield and investment grade bonds. Through its subsidiary, the Company also manages a range of engineered alpha strategies, including systematic equity, systematic alternatives and managed options strategies. The Company’s open-end fund lineup includes tax-managed equity funds, and non-tax-managed equity and multi-asset funds. The Company’s family of closed-end funds includes municipal bond, domestic and global equity, and bank loan.

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