Brightsphere Investment Group (NYSE:BSIG) and Fidus Investment (NYSE:FDUS) Critical Analysis

Brightsphere Investment Group (NYSE:BSIG) and Fidus Investment (NASDAQ:FDUS) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, risk, earnings, dividends, institutional ownership, profitability and valuation.

Dividends

Brightsphere Investment Group pays an annual dividend of $0.04 per share and has a dividend yield of 0.3%. Fidus Investment pays an annual dividend of $1.20 per share and has a dividend yield of 13.3%. Brightsphere Investment Group pays out 2.3% of its earnings in the form of a dividend. Fidus Investment pays out 83.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Brightsphere Investment Group has increased its dividend for 3 consecutive years and Fidus Investment has increased its dividend for 4 consecutive years. Fidus Investment is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Brightsphere Investment Group and Fidus Investment, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Brightsphere Investment Group 1 5 2 0 2.13
Fidus Investment 0 2 3 0 2.60

Brightsphere Investment Group currently has a consensus price target of $12.75, suggesting a potential upside of 1.19%. Fidus Investment has a consensus price target of $13.50, suggesting a potential upside of 49.67%. Given Fidus Investment’s stronger consensus rating and higher possible upside, analysts plainly believe Fidus Investment is more favorable than Brightsphere Investment Group.

Institutional & Insider Ownership

99.0% of Brightsphere Investment Group shares are held by institutional investors. Comparatively, 30.1% of Fidus Investment shares are held by institutional investors. 25.8% of Brightsphere Investment Group shares are held by insiders. Comparatively, 1.4% of Fidus Investment shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Volatility and Risk

Brightsphere Investment Group has a beta of 1.63, indicating that its stock price is 63% more volatile than the S&P 500. Comparatively, Fidus Investment has a beta of 1.68, indicating that its stock price is 68% more volatile than the S&P 500.

Profitability

This table compares Brightsphere Investment Group and Fidus Investment’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Brightsphere Investment Group 25.64% 1,914.29% 11.86%
Fidus Investment 13.19% 8.19% 4.31%

Valuation & Earnings

This table compares Brightsphere Investment Group and Fidus Investment’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Brightsphere Investment Group $819.50 million 1.24 $223.90 million $1.77 7.12
Fidus Investment $77.11 million 2.86 $48.47 million $1.44 6.26

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

Summary

Brightsphere Investment Group beats Fidus Investment on 9 of the 17 factors compared between the two stocks.

About Brightsphere Investment Group

BrightSphere Investment Group plc is a publically owned asset management holding company. The firm provides its services to individuals and institutions. It manages separate client focused portfolios through its subsidiaries. The firm also launches equity mutual funds for its clients. It invests in public equity, fixed income, and alternative investment markets through its subsidiaries. The firm was founded in 1980 is based Boston, Massachusetts. It was formally known as OM Asset Management plc. BrightSphere Investment Group plc operates as a former subsidiary of Old Mutual Global Investors.

About Fidus Investment

Fidus Investment Corporation is a business development company specializing in leveraged buyouts, refinancings, change of ownership transactions, recapitalizations, strategic acquisitions, mezzanine, growth capital, business expansion, lower middle market investments, debt investments, subordinated and second lien loans, senior secured and unitranche debt, preferred equity, warrants, subordinated debt, senior subordinated notes, junior secured loans, and unitranche loans. It does not invest in turnarounds or distressed situations. The fund prefers to invest in aerospace and defense, business services, consumer products and services including retail, food, and beverage, healthcare products and services, industrial products and services, information technology services, niche manufacturing, transportation and logistics, and value-added distribution sectors. It seeks to invest in companies based in United States. The fund typically invests between $5 million and $15 million per transaction in companies with annual revenues between $10 million and $150 million and an annual EBITDA between $3 million and $20 million, but it can occasionally invest in larger or smaller companies. It seeks to acquire minority equity stakes and board observation rights in conjunction with its investments.

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