Analyzing Franklin Resources (BEN) and Oaktree Capital Group (OAK)

Oaktree Capital Group (NYSE: OAK) and Franklin Resources (NYSE:BEN) are both mid-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, profitability, analyst recommendations, institutional ownership, earnings, valuation and risk.

Dividends

Oaktree Capital Group pays an annual dividend of $5.24 per share and has a dividend yield of 11.1%. Franklin Resources pays an annual dividend of $0.80 per share and has a dividend yield of 1.8%. Oaktree Capital Group pays out 114.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Franklin Resources pays out 26.1% of its earnings in the form of a dividend. Franklin Resources has increased its dividend for 35 consecutive years.

Volatility & Risk

Oaktree Capital Group has a beta of 0.59, meaning that its share price is 41% less volatile than the S&P 500. Comparatively, Franklin Resources has a beta of 1.72, meaning that its share price is 72% more volatile than the S&P 500.

Insider & Institutional Ownership

21.8% of Oaktree Capital Group shares are held by institutional investors. Comparatively, 45.0% of Franklin Resources shares are held by institutional investors. 21.6% of Franklin Resources shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Oaktree Capital Group and Franklin Resources’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Oaktree Capital Group 19.17% 20.11% 4.95%
Franklin Resources 27.30% 13.96% 10.41%

Analyst Ratings

This is a breakdown of recent ratings and price targets for Oaktree Capital Group and Franklin Resources, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Oaktree Capital Group 1 5 1 0 2.00
Franklin Resources 3 6 1 0 1.80

Oaktree Capital Group presently has a consensus target price of $47.20, indicating a potential upside of 0.21%. Franklin Resources has a consensus target price of $43.67, indicating a potential downside of 2.81%. Given Oaktree Capital Group’s stronger consensus rating and higher probable upside, equities analysts plainly believe Oaktree Capital Group is more favorable than Franklin Resources.

Valuation and Earnings

This table compares Oaktree Capital Group and Franklin Resources’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Oaktree Capital Group $1.51 billion 2.00 $497.59 million $4.57 10.31
Franklin Resources $6.39 billion 3.92 $2.31 billion $3.06 14.68

Franklin Resources has higher revenue and earnings than Oaktree Capital Group. Oaktree Capital Group is trading at a lower price-to-earnings ratio than Franklin Resources, indicating that it is currently the more affordable of the two stocks.

Summary

Franklin Resources beats Oaktree Capital Group on 11 of the 16 factors compared between the two stocks.

Oaktree Capital Group Company Profile

Oaktree Capital Group, LLC (Oaktree) is an investment manager specializing in alternative investments. The Company operates through investment management segment, which consists of the investment management services that the Company provides to its clients. The Company manages investments in a range of strategies within approximately six asset classes, which include corporate debt, convertible securities, distressed debt, control investing, real estate and listed equities. The Funds managed by Oaktree include commingled funds, separate accounts and collateralized loan obligation vehicles (CLOs). The commingled funds include open-end and closed-end limited partnerships in which it makes an investment and for which it serves as the general partner. CLOs are structured finance vehicles in which the Company typically makes an investment and for which it serves as collateral manager. Its clientele includes the United States pension plans and corporations and/or their pension funds.

Franklin Resources Company Profile

Franklin Resources, Inc. is a holding company. The Company, along with its subsidiaries, operates as Franklin Templeton Investments. It is a global investment management company that provides investment management and related services to retail, institutional and high net-worth clients in jurisdictions around the world. The Company offers its investment products and services under the Franklin, Templeton, Franklin Mutual Series, Franklin Bissett, Fiduciary Trust, Darby, Balanced Equity Management, K2 and LibertyShares brand names. Its products include investment funds and institutional, high net-worth and separately managed accounts (collectively, sponsored investment products (SIPs)). It offers various types of SIPs, such as the United States funds, cross-border funds, local/regional funds, and other managed accounts, alternative investment products and trusts. Its investment funds include the United States-registered funds, non-United States-registered funds and unregistered funds.

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