Fortress Investment Group (NYSE: FIG) and Legg Mason (NYSE:LM) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their dividends, earnings, analyst recommendations, risk, profitability, valuation and institutional ownership.
Institutional and Insider Ownership
40.2% of Fortress Investment Group shares are held by institutional investors. Comparatively, 82.3% of Legg Mason shares are held by institutional investors. 45.2% of Fortress Investment Group shares are held by company insiders. Comparatively, 12.7% of Legg Mason shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
Earnings & Valuation
This table compares Fortress Investment Group and Legg Mason’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Fortress Investment Group||$950.66 million||1.84||$273.52 million||$0.44||18.16|
|Legg Mason||$2.98 billion||1.20||$572.31 million||$2.41||15.89|
Legg Mason has higher revenue and earnings than Fortress Investment Group. Legg Mason is trading at a lower price-to-earnings ratio than Fortress Investment Group, indicating that it is currently the more affordable of the two stocks.
This is a summary of recent recommendations and price targets for Fortress Investment Group and Legg Mason, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Fortress Investment Group||0||4||0||0||2.00|
Fortress Investment Group presently has a consensus target price of $6.00, suggesting a potential downside of 24.91%. Legg Mason has a consensus target price of $42.75, suggesting a potential upside of 11.65%. Given Legg Mason’s stronger consensus rating and higher possible upside, analysts clearly believe Legg Mason is more favorable than Fortress Investment Group.
Risk & Volatility
Fortress Investment Group has a beta of 1.92, meaning that its share price is 92% more volatile than the S&P 500. Comparatively, Legg Mason has a beta of 2.22, meaning that its share price is 122% more volatile than the S&P 500.
Fortress Investment Group pays an annual dividend of $0.36 per share and has a dividend yield of 4.5%. Legg Mason pays an annual dividend of $1.12 per share and has a dividend yield of 2.9%. Fortress Investment Group pays out 81.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Legg Mason pays out 46.5% of its earnings in the form of a dividend. Fortress Investment Group has increased its dividend for 7 consecutive years. Fortress Investment Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This table compares Fortress Investment Group and Legg Mason’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Fortress Investment Group||10.61%||38.79%||15.58%|
Legg Mason beats Fortress Investment Group on 9 of the 17 factors compared between the two stocks.
About Fortress Investment Group
Fortress Investment Group LLC (Fortress) is an investment management firm. The Company operates through segments, including private equity funds, permanent capital vehicles, credit hedge funds, credit PE funds, liquid hedge funds and Logan Circle. Its business is to sponsor the formation of, and provide investment management services for, various investment funds, permanent capital vehicles and related managed accounts (the Fortress Funds). Fortress’s sources of income from the Fortress Funds are management fees, incentive income and investment income on its investments in the funds. As of December 31, 2016, the Company’s private equity business manages approximately $13.5 billion of assets under management (AUM); credit funds business manages approximately $18.1 billion of AUM; liquid hedge funds business manages over $4.6 billion of AUM, and Logan Circle business manages approximately $33.4 billion of AUM.
About Legg Mason
Legg Mason, Inc. is a holding company. The Company and its subsidiaries are principally engaged in providing asset management and related financial services to individuals, institutions, corporations and municipalities. The Company operates through Global Asset Management segment. Global Asset Management provides investment advisory services to institutional and individual clients and to the Company-sponsored investment funds. The Company, through its subsidiaries, provides investment management and related services to institutional and individual clients, Company-sponsored investment funds and retail separately managed account programs. It offers its products and services directly and through various financial intermediaries. It has operations principally in the United States and the United Kingdom and also has offices in Australia, Bahamas, Brazil, Canada, Chile, China, Dubai, France, Germany, Italy, Japan, Luxembourg, Poland, Singapore, Spain, Switzerland and Taiwan.
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