Pzena Investment Management (NYSE: PZN) and Federated Investors (NYSE:FII) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, earnings, analyst recommendations, valuation, institutional ownership, dividends and risk.
Valuation & Earnings
This table compares Pzena Investment Management and Federated Investors’ gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Pzena Investment Management||$122.22 million||1.36||$56.40 million||$0.66||14.62|
|Federated Investors||$1.13 billion||2.46||$345.66 million||$2.08||13.67|
Federated Investors has higher revenue and earnings than Pzena Investment Management. Federated Investors is trading at a lower price-to-earnings ratio than Pzena Investment Management, indicating that it is currently the more affordable of the two stocks.
This table compares Pzena Investment Management and Federated Investors’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Pzena Investment Management||14.82%||12.93%||6.38%|
Pzena Investment Management pays an annual dividend of $0.12 per share and has a dividend yield of 1.2%. Federated Investors pays an annual dividend of $1.00 per share and has a dividend yield of 3.5%. Pzena Investment Management pays out 18.2% of its earnings in the form of a dividend. Federated Investors pays out 48.1% 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.
Risk & Volatility
Pzena Investment Management has a beta of 1.63, meaning that its share price is 63% more volatile than the S&P 500. Comparatively, Federated Investors has a beta of 1.42, meaning that its share price is 42% more volatile than the S&P 500.
Institutional & Insider Ownership
17.4% of Pzena Investment Management shares are held by institutional investors. Comparatively, 82.9% of Federated Investors shares are held by institutional investors. 55.9% of Pzena Investment Management shares are held by insiders. Comparatively, 7.1% of Federated Investors shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
This is a breakdown of recent recommendations for Pzena Investment Management and Federated Investors, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Pzena Investment Management||0||1||0||0||2.00|
Federated Investors has a consensus target price of $23.50, indicating a potential downside of 17.37%. Given Federated Investors’ higher possible upside, analysts plainly believe Federated Investors is more favorable than Pzena Investment Management.
Federated Investors beats Pzena Investment Management on 10 of the 15 factors compared between the two stocks.
Pzena Investment Management Company Profile
Pzena Investment Management, Inc. is a holding company. The Company is the sole managing member of Pzena Investment Management, LLC. Pzena Investment Management, LLC is an investment management company. The Company also serves as the general partner of Pzena Investment Management, LP. The Company offers institutional investment products to public and corporate pension funds, endowments, foundations and certain commingled vehicles geared toward institutional investors. The Company also offers access to certain of its global and non-United States strategies through private placement vehicles and collective investment trusts. Pzena Investment Management, LLC is its operating company. Pzena Investment Management, LLC consists of Class A and Class B membership units.
Federated Investors Company Profile
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.
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