T. Rowe Price Group (NASDAQ: TROW) and OM Asset Management (NYSE:OMAM) are both financials companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, valuation, profitability, earnings, analyst recommendations, institutional ownership and dividends.
Insider and Institutional Ownership
72.4% of T. Rowe Price Group shares are owned by institutional investors. Comparatively, 64.9% of OM Asset Management shares are owned by institutional investors. 3.6% of T. Rowe Price Group shares are owned by company insiders. Comparatively, 1.5% of OM Asset Management shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
This table compares T. Rowe Price Group and OM Asset Management’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|T. Rowe Price Group||33.10%||24.76%||19.41%|
|OM Asset Management||9.49%||114.45%||12.94%|
Volatility and Risk
T. Rowe Price Group has a beta of 1.32, suggesting that its share price is 32% more volatile than the S&P 500. Comparatively, OM Asset Management has a beta of 1.76, suggesting that its share price is 76% more volatile than the S&P 500.
This is a breakdown of current recommendations for T. Rowe Price Group and OM Asset Management, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|T. Rowe Price Group||2||5||3||0||2.10|
|OM Asset Management||0||1||6||0||2.86|
T. Rowe Price Group presently has a consensus target price of $95.25, indicating a potential downside of 15.16%. OM Asset Management has a consensus target price of $19.50, indicating a potential upside of 11.49%. Given OM Asset Management’s stronger consensus rating and higher probable upside, analysts plainly believe OM Asset Management is more favorable than T. Rowe Price Group.
T. Rowe Price Group pays an annual dividend of $2.28 per share and has a dividend yield of 2.0%. OM Asset Management pays an annual dividend of $0.36 per share and has a dividend yield of 2.1%. T. Rowe Price Group pays out 37.3% of its earnings in the form of a dividend. OM Asset Management pays out 56.3% 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. OM Asset Management has increased its dividend for 31 consecutive years. OM Asset Management is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Earnings and Valuation
This table compares T. Rowe Price Group and OM Asset Management’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|T. Rowe Price Group||$4.22 billion||6.44||$1.22 billion||$6.11||18.37|
|OM Asset Management||$663.50 million||2.89||$126.40 million||$0.64||27.33|
T. Rowe Price Group has higher revenue and earnings than OM Asset Management. T. Rowe Price Group is trading at a lower price-to-earnings ratio than OM Asset Management, indicating that it is currently the more affordable of the two stocks.
T. Rowe Price Group beats OM Asset Management on 9 of the 17 factors compared between the two stocks.
About T. Rowe Price Group
T. Rowe Price Group, Inc. is a financial services holding company. The Company provides global investment management services through its subsidiaries to investors across the world. The Company provides an array of Company sponsored the United States mutual funds, other sponsored pooled investment vehicles, sub advisory services, separate account management, recordkeeping, and related services to individuals, advisors, institutions, financial intermediaries and retirement plan sponsors. The Company distributes its products in countries located within three geographical regions: North America, Europe Middle East and Africa (EMEA), and Asia Pacific (APAC). It also offers specialized advisory services, including management of stable value investment contracts and a distribution management service for the disposition of equity securities its clients receive from third-party venture capital investment pools. As of December 31, 2016, it serviced clients in 45 countries across the world.
About OM Asset Management
OM Asset Management plc is a global, diversified, multi-boutique asset management company. As of December 31, 2016, the Company operated its business through its eight Affiliates, each of which operated autonomously and employed its own investment processes. Its Affiliates include Acadian Asset Management LLC; Barrow, Hanley, Mewhinney & Strauss, LLC; Campbell Global, LLC; Copper Rock Capital Partners LLC; Heitman LLC; Investment Counselors of Maryland, LLC; Landmark Partners, LLC, and Thompson, Siegel & Walmsley LLC. It works with boutique asset managers, and the Company leverages the resources within its organization to engage with its Affiliates and provide them with capabilities unavailable to specialist asset management firms. The Company works with its Affiliates to identify and execute upon opportunities for their businesses in areas, such as business line expansion and product development, as well as activities required for the operation of investment boutiques.
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