OM Asset Management (OMAM) vs. T. Rowe Price Group (TROW) Critical Analysis

T. Rowe Price Group (NASDAQ: TROW) and OM Asset Management (NYSE:OMAM) are both mid-cap financials companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, dividends, institutional ownership, risk, valuation, analyst recommendations and earnings.

Analyst Recommendations

This is a summary of recent recommendations and price targets for T. Rowe Price Group and OM Asset Management, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
T. Rowe Price Group 1 5 3 0 2.22
OM Asset Management 0 1 6 0 2.86

T. Rowe Price Group presently has a consensus price target of $95.25, indicating a potential downside of 17.68%. OM Asset Management has a consensus price target of $19.50, indicating a potential upside of 6.50%. Given OM Asset Management’s stronger consensus rating and higher possible upside, analysts plainly believe OM Asset Management is more favorable than T. Rowe Price Group.

Institutional and Insider Ownership

72.3% of T. Rowe Price Group shares are held by institutional investors. Comparatively, 64.9% of OM Asset Management shares are held by institutional investors. 3.6% of T. Rowe Price Group shares are held by insiders. Comparatively, 1.5% of OM Asset Management shares are held by 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.

Earnings & Valuation

This table compares T. Rowe Price Group and OM Asset Management’s gross 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 6.64 $1.22 billion $6.11 18.94
OM Asset Management $663.50 million 3.03 $126.40 million $0.64 28.61

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.

Dividends

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 2.0%. 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. T. Rowe Price Group is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

T. Rowe Price Group has a beta of 1.32, meaning that its stock price is 32% more volatile than the S&P 500. Comparatively, OM Asset Management has a beta of 1.76, meaning that its stock price is 76% more volatile than the S&P 500.

Profitability

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%

Summary

T. Rowe Price Group beats OM Asset Management on 10 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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