Financial Analysis: Cohen & Steers (NYSE:CNS) and XP (NASDAQ:XP)

XP (NASDAQ:XP) and Cohen & Steers (NYSE:CNS) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, earnings, dividends, analyst recommendations, risk, valuation and institutional ownership.

Dividends

XP pays an annual dividend of $0.40 per share and has a dividend yield of 2.0%. Cohen & Steers pays an annual dividend of $2.68 per share and has a dividend yield of 3.7%. XP pays out 20.9% of its earnings in the form of a dividend. Cohen & Steers pays out 82.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Cohen & Steers has raised its dividend for 16 consecutive years. Cohen & Steers is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

XP has a beta of 1.08, suggesting that its share price is 8% more volatile than the S&P 500. Comparatively, Cohen & Steers has a beta of 1.21, suggesting that its share price is 21% more volatile than the S&P 500.

Institutional & Insider Ownership

59.2% of XP shares are held by institutional investors. Comparatively, 51.5% of Cohen & Steers shares are held by institutional investors. 45.4% of Cohen & Steers shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares XP and Cohen & Steers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
XP	27.20%	22.19%	1.33%
Cohen & Steers	28.82%	27.41%	19.58%

Analyst Recommendations

This is a breakdown of current ratings for XP and Cohen & Steers, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
XP	0	2	4	0	2.67
Cohen & Steers	1	1	2	0	2.25

XP currently has a consensus target price of $23.00, indicating a potential upside of 16.40%. Cohen & Steers has a consensus target price of $78.00, indicating a potential upside of 8.62%. Given XP’s stronger consensus rating and higher probable upside, equities research analysts clearly believe XP is more favorable than Cohen & Steers.

Valuation & Earnings

This table compares XP and Cohen & Steers”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
XP	$3.30 billion	3.22	$925.91 million	$1.91	10.35
Cohen & Steers	$556.12 million	6.64	$153.22 million	$3.26	22.03

XP has higher revenue and earnings than Cohen & Steers. XP is trading at a lower price-to-earnings ratio than Cohen & Steers, indicating that it is currently the more affordable of the two stocks.

Summary

Cohen & Steers beats XP on 10 of the 17 factors compared between the two stocks.

About XP

XP Inc. provides financial products and services in Brazil. It offers securities brokerage, private pension plans, commercial, and investment banking products, such as loan operations and transactions in the foreign exchange markets and deposits; product structuring and capital markets services for corporate clients and issuers of fixed income products; advisory services for mass-affluent and institutional clients; and wealth management services for high-net-worth customers and institutional clients. The company also offers XP Educação, an online financial education portal that offers seminars, classes, and learning tools to help teach individuals on topics, such as basics of investing, techniques, and investment strategies, as well as insurance brokerage services. In addition, it operates XP Platform, an open product platform that provides clients to access investment products in the market, including equity and fixed income securities, mutual and hedge funds, structured products, life insurance, pension plans, real-estate investment funds, and others. The company was founded in 2001 and is based in São Paulo, Brazil.

About Cohen & Steers

Cohen & Steers, Inc. is a holding company, which operates as an investment manager specializing in liquid real assets, which include real estate securities, listed infrastructure, commodities, natural resource equities, preferred securities, and other income solutions. It manages investment vehicles, such as institutional accounts, open-end funds and closed-end funds. The company was founded by Martin Cohen and Robert Hamilton Steers in 1986 and is headquartered in New York, NY.