Ares Management (NYSE:ARES) versus Patria Investments (NYSE:PAX) Financial Analysis

Ares Management (NYSE:ARESGet Free Report) and Patria Investments (NYSE:PAXGet Free Report) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, profitability, institutional ownership, earnings, valuation, risk and analyst recommendations.

Risk & Volatility

Ares Management has a beta of 1.18, indicating that its stock price is 18% more volatile than the S&P 500. Comparatively, Patria Investments has a beta of 0.58, indicating that its stock price is 42% less volatile than the S&P 500.

Insider & Institutional Ownership

50.0% of Ares Management shares are held by institutional investors. Comparatively, 96.3% of Patria Investments shares are held by institutional investors. 47.3% of Ares Management shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Ares Management and Patria Investments’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ares Management 13.06% 21.58% 3.81%
Patria Investments 39.10% 34.32% 17.70%

Dividends

Ares Management pays an annual dividend of $3.08 per share and has a dividend yield of 2.2%. Patria Investments pays an annual dividend of $0.80 per share and has a dividend yield of 5.4%. Ares Management pays out 128.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Patria Investments pays out 98.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ares Management has raised its dividend for 5 consecutive years. Patria Investments is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of recent ratings for Ares Management and Patria Investments, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ares Management 0 6 5 0 2.45
Patria Investments 0 1 2 0 2.67

Ares Management presently has a consensus price target of $123.45, indicating a potential downside of 9.93%. Patria Investments has a consensus price target of $18.50, indicating a potential upside of 25.68%. Given Patria Investments’ stronger consensus rating and higher probable upside, analysts clearly believe Patria Investments is more favorable than Ares Management.

Valuation & Earnings

This table compares Ares Management and Patria Investments’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ares Management $3.63 billion 11.59 $474.33 million $2.39 57.35
Patria Investments $258.90 million N/A $92.96 million $0.81 18.17

Ares Management has higher revenue and earnings than Patria Investments. Patria Investments is trading at a lower price-to-earnings ratio than Ares Management, indicating that it is currently the more affordable of the two stocks.

About Ares Management

(Get Free Report)

Ares Management Corporation operates as an alternative asset manager in the United States, Europe, and Asia. The company's Tradable Credit Group segment manages various types of investment funds, such as commingled and separately managed accounts for institutional investors, and publicly traded vehicles and sub-advised funds for retail investors in the tradable and non-investment grade corporate credit markets. Its Direct Lending Group segment provides financing solutions to small-to-medium sized companies. The company's Private Equity Group segment focuses on majority or shared-control investments primarily in under-capitalized companies. Its Real Estate Group segment invests in new developments and the repositioning of assets, with a focus on control or majority-control investments; and originates and invests in a range of self-originated financing opportunities for middle-market owners and operators of commercial real estate. The firm was previously known as Ares Management, L.P. Ares Management Corporation was founded in 1997 and is headquartered in Los Angeles, California with additional offices in the United States, Europe and Asia. Ares Management GP LLC is the general partner of the company.

About Patria Investments

(Get Free Report)

Patria Investments Limited operates as a private market investment firm focused on investing in Latin America. The company offers asset management services to investors focusing on private equity funds, infrastructure development funds, co-investments funds, constructivist equity funds, and real estate and credit funds. Patria Investments Limited was founded in 1994 and is headquartered in Grand Cayman, the Cayman Islands.

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