BlackRock (BLK) & Arlington Asset Investment (AI) Head-To-Head Analysis

Arlington Asset Investment (NYSE: AI) and BlackRock (NYSE:BLK) are both financials companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, risk, earnings, institutional ownership, analyst recommendations, valuation and profitability.

Dividends

Arlington Asset Investment pays an annual dividend of $2.20 per share and has a dividend yield of 18.5%. BlackRock pays an annual dividend of $10.00 per share and has a dividend yield of 1.8%. Arlington Asset Investment pays out -150.7% of its earnings in the form of a dividend. BlackRock pays out 46.8% 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. BlackRock has increased its dividend for 8 consecutive years. Arlington Asset Investment is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation and Earnings

This table compares Arlington Asset Investment and BlackRock’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Arlington Asset Investment $105.34 million 3.18 -$41.34 million ($1.46) -8.16
BlackRock $11.16 billion 7.98 $3.17 billion $21.36 26.01

BlackRock has higher revenue and earnings than Arlington Asset Investment. Arlington Asset Investment is trading at a lower price-to-earnings ratio than BlackRock, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

37.8% of Arlington Asset Investment shares are owned by institutional investors. Comparatively, 83.5% of BlackRock shares are owned by institutional investors. 5.9% of Arlington Asset Investment shares are owned by insiders. Comparatively, 1.9% of BlackRock shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Arlington Asset Investment and BlackRock’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Arlington Asset Investment -27.20% -8.36% -0.72%
BlackRock 29.52% 12.01% 1.60%

Volatility & Risk

Arlington Asset Investment has a beta of 1.06, indicating that its stock price is 6% more volatile than the S&P 500. Comparatively, BlackRock has a beta of 1.81, indicating that its stock price is 81% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and price targets for Arlington Asset Investment and BlackRock, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Arlington Asset Investment 0 1 2 0 2.67
BlackRock 0 3 8 0 2.73

Arlington Asset Investment presently has a consensus target price of $13.75, indicating a potential upside of 15.45%. BlackRock has a consensus target price of $501.27, indicating a potential downside of 9.77%. Given Arlington Asset Investment’s higher probable upside, research analysts plainly believe Arlington Asset Investment is more favorable than BlackRock.

Summary

BlackRock beats Arlington Asset Investment on 13 of the 17 factors compared between the two stocks.

Arlington Asset Investment Company Profile

Arlington Asset Investment Corp. is an investment company. The Company focuses on acquiring and holding a levered portfolio of residential mortgage-backed securities (MBS), consisting of agency MBS and private-label MBS. Agency MBS include residential mortgage pass-through certificates for which the principal and interest payments are guaranteed by a United States Government agency or government-sponsored enterprise (GSE), such as the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). Private-label MBS, or non-agency MBS, include residential MBS that are not guaranteed by a GSE or the United States Government. The Company funds its investments primarily through short-term financing arrangements. The Company purchases agency MBS either in initial offerings or in the secondary market through broker-dealers or similar entities. It may invest in agency MBS collateralized by adjustable-rate mortgage loans (ARMs) or hybrid ARMs.

BlackRock Company Profile

BlackRock, Inc. (BlackRock) is an investment management company. BlackRock provides a range of investment and risk management services to institutional and retail clients worldwide. Its diverse platform of active (alpha) and index (beta) investment strategies across asset classes enables the Company to tailor investment outcomes and asset allocation solutions for clients. Its product offerings include single- and multi-asset portfolios investing in equities, fixed income, alternatives and money market instruments. Its products are offered directly and through intermediaries in a range of vehicles, including open-end and closed-end mutual funds, iShares exchange-traded funds (ETFs), separate accounts, collective investment funds and other pooled investment vehicles. It offers its Aladdin investment system, as well as risk management, outsourcing, advisory and technology services, to institutional investors and wealth management intermediaries under the BlackRock Solutions name.

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