Medley Management (MDLY) and Pzena Investment Management (PZN) Critical Contrast

Pzena Investment Management (NYSE: PZN) and Medley Management (NASDAQ:MDLY) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, earnings, institutional ownership, analyst recommendations, profitability, dividends and risk.

Dividends

Pzena Investment Management pays an annual dividend of $0.12 per share and has a dividend yield of 1.2%. Medley Management does not pay a dividend. Pzena Investment Management pays out 18.2% of its earnings in the form of a dividend.

Earnings and Valuation

This table compares Pzena Investment Management and Medley Management’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Pzena Investment Management $122.22 million 1.44 $56.40 million $0.66 15.33
Medley Management $72.45 million 0.49 $23.59 million N/A N/A

Pzena Investment Management has higher revenue and earnings than Medley Management.

Insider and Institutional Ownership

16.8% of Pzena Investment Management shares are owned by institutional investors. 57.4% of Pzena Investment Management shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of current recommendations and price targets for Pzena Investment Management and Medley Management, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pzena Investment Management 0 1 0 0 2.00
Medley Management 0 5 1 0 2.17

Medley Management has a consensus target price of $9.21, suggesting a potential upside of 46.16%. Given Medley Management’s stronger consensus rating and higher possible upside, analysts clearly believe Medley Management is more favorable than Pzena Investment Management.

Profitability

This table compares Pzena Investment Management and Medley Management’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Pzena Investment Management 14.82% 12.93% 6.38%
Medley Management 33.22% N/A 14.30%

About Pzena Investment Management

Pzena Investment Management, Inc. is a holding company. The Company is the sole managing member of Pzena Investment Management, LLC. Pzena Investment Management, LLC is an investment management company. The Company also serves as the general partner of Pzena Investment Management, LP. The Company offers institutional investment products to public and corporate pension funds, endowments, foundations and certain commingled vehicles geared toward institutional investors. The Company also offers access to certain of its global and non-United States strategies through private placement vehicles and collective investment trusts. Pzena Investment Management, LLC is its operating company. Pzena Investment Management, LLC consists of Class A and Class B membership units.

About Medley Management

Medley Management Inc. is an asset management firm offering yield solutions to retail and institutional investors. The Company operates in the investment management segment. It is focused on credit-related investment strategies, primarily originating senior secured loans to private middle market companies in the United States. The Company generally holds these loans to maturity. Its national direct origination franchise provides capital to the middle market in the United States. The Company has over $4.8 billion of assets under management (AUM) in approximately two business development companies (BDCs), Medley Capital Corporation (MCC) and Sierra Income Corporation (SIC), as well as private investment vehicles. It has over $5 billion of AUM. The Company provides capital to over 300 companies across approximately 35 industries in North America. The Company’s long-dated private funds include MOF I, MOF II and MOF III. Its private funds are managed through partnership structures

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