Critical Survey: Calamos Asset Management (CLMS) and Federated Investors (FII)

Calamos Asset Management (NASDAQ: CLMS) and Federated Investors (NYSE:FII) are both financials companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, risk, analyst recommendations, profitability, institutional ownership, dividends and earnings.

Profitability

This table compares Calamos Asset Management and Federated Investors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Calamos Asset Management 58.85% 2.51% 13.51%
Federated Investors 18.91% 33.93% 18.36%

Earnings and Valuation

This table compares Calamos Asset Management and Federated Investors’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Calamos Asset Management N/A N/A N/A $0.05 165.60
Federated Investors $1.13 billion 2.76 $345.66 million $2.08 14.75

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

Dividends

Calamos Asset Management pays an annual dividend of $0.60 per share and has a dividend yield of 7.2%. Federated Investors pays an annual dividend of $1.00 per share and has a dividend yield of 3.3%. Calamos Asset Management pays out 1,200.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Federated Investors pays out 48.1% of its earnings in the form of a dividend.

Volatility & Risk

Calamos Asset Management has a beta of 1.14, meaning that its share price is 14% more volatile than the S&P 500. Comparatively, Federated Investors has a beta of 1.45, meaning that its share price is 45% more volatile than the S&P 500.

Institutional & Insider Ownership

56.5% of Calamos Asset Management shares are held by institutional investors. Comparatively, 82.9% of Federated Investors shares are held by institutional investors. 20.4% of Calamos Asset Management shares are held by company insiders. Comparatively, 7.1% of Federated Investors 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.

Analyst Recommendations

This is a summary of current ratings for Calamos Asset Management and Federated Investors, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Calamos Asset Management 0 0 0 0 N/A
Federated Investors 2 4 0 0 1.67

Federated Investors has a consensus target price of $23.50, suggesting a potential downside of 23.43%. Given Federated Investors’ higher possible upside, analysts clearly believe Federated Investors is more favorable than Calamos Asset Management.

Summary

Federated Investors beats Calamos Asset Management on 8 of the 11 factors compared between the two stocks.

About Calamos Asset Management

Calamos Asset Management, Inc. is a holding company. The Company is the manager of Calamos Investments LLC, which owns and manages its operating companies. The Company provides investment advisory services to individuals and institutional investors through investment products that include open-end and closed-end funds (Funds), an exchange traded fund, separate accounts, offshore funds and partnerships. The subsidiaries through which the Company provides these services include Calamos Advisors LLC (CAL), an investment advisor; Calamos Financial Services LLC (CFS), a broker-dealer; Calamos Wealth Management LLC, an investment advisor, and Calamos Investments LLP, a United Kingdom-based investment advisor, and a distributor of the offshore funds and Company products.

About Federated Investors

Federated Investors, Inc. (Federated) is a provider of investment management products and related financial services. Federated operates through investment management business segment. It is engaged in sponsoring, marketing and providing investment-related services to various investment products, including mutual funds and Separate Accounts, which include separately managed accounts, institutional accounts, sub-advised funds and other managed products. It operates in one segment, the investment management business. As of December 31, 2016, Federated provided investment advisory services to 124 sponsored investment companies and other funds (Federated Funds). It markets these funds to banks, brokers and dealers and other financial intermediaries using them to meet the needs of their customers and clients, including retail investors, corporations and retirement plans. The Company offers a range of products and strategies, including money market, equity and fixed-income investments.

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