Affiliated Managers Group (NYSE:AMG) and Federated Investors (NYSE:FII) are both mid-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, valuation, profitability, analyst recommendations, institutional ownership, risk and dividends.
This is a summary of current recommendations for Affiliated Managers Group and Federated Investors, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Affiliated Managers Group||1||3||1||0||2.00|
Affiliated Managers Group currently has a consensus price target of $88.40, indicating a potential upside of 8.23%. Federated Investors has a consensus price target of $34.17, indicating a potential upside of 3.94%. Given Affiliated Managers Group’s higher possible upside, research analysts clearly believe Affiliated Managers Group is more favorable than Federated Investors.
This table compares Affiliated Managers Group and Federated Investors’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Affiliated Managers Group||0.70%||19.58%||9.37%|
Insider & Institutional Ownership
95.8% of Affiliated Managers Group shares are held by institutional investors. Comparatively, 82.2% of Federated Investors shares are held by institutional investors. 1.4% of Affiliated Managers Group shares are held by company insiders. Comparatively, 5.5% of Federated Investors shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
Earnings and Valuation
This table compares Affiliated Managers Group and Federated Investors’ revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Affiliated Managers Group||$2.24 billion||1.80||$15.70 million||$14.22||5.74|
|Federated Investors||$1.33 billion||2.51||$272.34 million||$2.69||12.22|
Federated Investors has lower revenue, but higher earnings than Affiliated Managers Group. Affiliated Managers Group is trading at a lower price-to-earnings ratio than Federated Investors, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
Affiliated Managers Group has a beta of 1.69, suggesting that its stock price is 69% more volatile than the S&P 500. Comparatively, Federated Investors has a beta of 0.73, suggesting that its stock price is 27% less volatile than the S&P 500.
Affiliated Managers Group pays an annual dividend of $1.28 per share and has a dividend yield of 1.6%. Federated Investors pays an annual dividend of $1.08 per share and has a dividend yield of 3.3%. Affiliated Managers Group pays out 9.0% of its earnings in the form of a dividend. Federated Investors pays out 40.1% 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. Affiliated Managers Group has increased its dividend for 2 consecutive years and Federated Investors has increased its dividend for 2 consecutive years.
About Affiliated Managers Group
Affiliated Managers Group, Inc., through its affiliates, operates as an asset management company providing investment management services to mutual funds, institutional clients, and high net worth individuals in the United States. It provides advisory or subadvisory services to mutual funds. These funds are distributed to retail and institutional clients directly and through intermediaries, including independent investment advisors, retirement plan sponsors, broker-dealers, major fund marketplaces, and bank trust departments. The company also offers investment products in various investment styles in the institutional distribution channel, including small, small/mid, mid, and large capitalization value and growth equity, and emerging markets. In addition, it offers quantitative, alternative, and fixed income products, and manages assets for foundations and endowments, defined benefit, and defined contribution plans for corporations and municipalities. Affiliated Managers Group provides investment management or customized investment counseling and fiduciary services. The company was formed as a corporation under the laws of Delaware in 1993. Affiliated Managers Group is based in Prides Crossing, Massachusetts.
About Federated Investors
Federated Investors, Inc. is a publicly owned asset management holding company. Through its subsidiaries, the firm provides its services to individuals, including high net worth individuals, banking or thrift institutions, investment companies, pension and profit sharing plans, pooled investment vehicles, charitable organizations, state or municipal government entities, and registered investment advisors. Through its subsidiaries, it manages separate client-focused equity, fixed income, balanced and money market mutual funds along with separate client-focused equity, fixed income, money market, and balanced portfolios. Through its subsidiaries, the firm invests in the public equity and fixed income markets across the globe. It invests in growth and value stocks of small-cap, mid-cap, and large-cap companies. The firm makes its fixed income investments in ultra-short, short-term, and intermediate-term mortgage-backed, U.S. Government, U.S. corporate, high yield, and municipal securities. It employs both fundamental and quantitative analysis to make its equity investments. Federated Investors, Inc. was founded in 1955 and is based in Pittsburgh, Pennsylvania with additional offices in New York City and London, United Kingdom.
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