Franklin Resources (NYSE: BEN) and Fortress Investment Group (NYSE:FIG) are both mid-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, risk, analyst recommendations, valuation, institutional ownership, dividends and profitability.
This table compares Franklin Resources and Fortress Investment Group’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%|
Valuation & Earnings
This table compares Franklin Resources and Fortress Investment Group’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Franklin Resources||$6.39 billion||3.91||$2.31 billion||$3.06||14.64|
|Fortress Investment Group||$950.66 million||1.84||$273.52 million||$0.44||18.16|
Franklin Resources has higher revenue and earnings than Fortress Investment Group. Franklin Resources 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.
Risk and Volatility
Franklin Resources has a beta of 1.72, suggesting that its stock price is 72% more volatile than the S&P 500. Comparatively, Fortress Investment Group has a beta of 1.92, suggesting that its stock price is 92% more volatile than the S&P 500.
Insider and Institutional Ownership
45.0% of Franklin Resources shares are held by institutional investors. Comparatively, 40.2% of Fortress Investment Group shares are held by institutional investors. 21.6% of Franklin Resources shares are held by company insiders. Comparatively, 45.2% of Fortress Investment Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Franklin Resources pays an annual dividend of $0.80 per share and has a dividend yield of 1.8%. Fortress Investment Group pays an annual dividend of $0.36 per share and has a dividend yield of 4.5%. Franklin Resources pays out 26.1% of its earnings in the form of a dividend. 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. Franklin Resources has raised its dividend for 35 consecutive years.
This is a breakdown of recent recommendations for Franklin Resources and Fortress Investment Group, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Fortress Investment Group||0||4||0||0||2.00|
Franklin Resources presently has a consensus price target of $43.67, suggesting a potential downside of 2.53%. Fortress Investment Group has a consensus price target of $6.00, suggesting a potential downside of 24.91%. Given Franklin Resources’ higher possible upside, equities analysts plainly believe Franklin Resources is more favorable than Fortress Investment Group.
Franklin Resources beats Fortress Investment Group on 11 of the 17 factors compared between the two stocks.
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.
Fortress Investment Group Company Profile
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.
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