Affiliated Managers Group (NYSE: AMG) and Financial Engines (NASDAQ:FNGN) are both mid-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, earnings, institutional ownership, dividends, analyst recommendations, valuation and risk.
Affiliated Managers Group pays an annual dividend of $1.20 per share and has a dividend yield of 0.8%. Financial Engines pays an annual dividend of $0.32 per share and has a dividend yield of 0.7%. Affiliated Managers Group pays out 8.2% of its earnings in the form of a dividend. Financial Engines pays out 31.1% 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. Affiliated Managers Group is clearly the better dividend stock, given its higher yield and lower payout ratio.
Valuation and Earnings
This table compares Affiliated Managers Group and Financial Engines’ revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Affiliated Managers Group||$2.31 billion||3.49||$689.50 million||$14.60||10.14|
|Financial Engines||$480.51 million||5.97||$46.66 million||$1.03||43.69|
Affiliated Managers Group has higher revenue and earnings than Financial Engines. Affiliated Managers Group is trading at a lower price-to-earnings ratio than Financial Engines, indicating that it is currently the more affordable of the two stocks.
This is a summary of current recommendations and price targets for Affiliated Managers Group and Financial Engines, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Affiliated Managers Group||0||3||4||0||2.57|
Affiliated Managers Group currently has a consensus target price of $213.57, indicating a potential upside of 44.29%. Financial Engines has a consensus target price of $38.67, indicating a potential downside of 14.07%. Given Affiliated Managers Group’s stronger consensus rating and higher possible upside, analysts clearly believe Affiliated Managers Group is more favorable than Financial Engines.
This table compares Affiliated Managers Group and Financial Engines’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Affiliated Managers Group||30.34%||19.27%||9.90%|
Risk & Volatility
Affiliated Managers Group has a beta of 1.53, indicating that its share price is 53% more volatile than the S&P 500. Comparatively, Financial Engines has a beta of 1.46, indicating that its share price is 46% more volatile than the S&P 500.
Insider and Institutional Ownership
94.5% of Affiliated Managers Group shares are held by institutional investors. 0.9% of Affiliated Managers Group shares are held by company insiders. Comparatively, 3.0% of Financial Engines shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Affiliated Managers Group beats Financial Engines on 13 of the 16 factors compared between the two stocks.
Affiliated Managers Group Company Profile
Affiliated Managers Group, Inc., through its affiliates, operates as an asset management company providing investment management services to mutual funds, institutional clients, and high net worth individuals in the United States. It provides advisory or subadvisory services to mutual funds. These funds are distributed to retail and institutional clients directly and through intermediaries, including independent investment advisors, retirement plan sponsors, broker-dealers, major fund marketplaces, and bank trust departments. The company also offers investment products in various investment styles in the institutional distribution channel, including small, small/mid, mid, and large capitalization value and growth equity, and emerging markets. In addition, it offers quantitative, alternative, and fixed income products, and manages assets for foundations and endowments, defined benefit, and defined contribution plans for corporations and municipalities. Affiliated Managers Group provides investment management or customized investment counseling and fiduciary services. The company was formed as a corporation under the laws of Delaware in 1993. Affiliated Managers Group is based in Prides Crossing, Massachusetts.
Financial Engines Company Profile
Financial Engines, Inc. provides independent technology-enabled financial advisory, discretionary portfolio management, personalized investment advice, financial and retirement income planning, and financial education and guidance services in the United States. It assists individuals to develop a strategy to reach financial goals by offering a set of services, including personalized plans for saving and investing, assessments of retirement income, and the option to meet face-to-face with a financial advisor. The company's products and services include Professional Management that provides discretionary portfolio management service for individuals in the workplace who want affordable and personalized portfolio management for their retirement accounts; Personal Advisor, which offers discretionary portfolio management for 401(k), IRA, and taxable accounts for defined contribution (DC) plan participants and individual retail investors; and Online Advice, an Internet-based investment advisory service designed for individuals who wish to take an active role in personally managing their portfolios. Its products and services also comprise Financial Planning and Retirement Income Planning services, including social security guidance; and Financial Wellness, which offers a range of financial education and guidance through multiple channels, including in person, on-site events, online content, and phone-based advisors. The company delivers its services to plan sponsors and plan participants primarily through connections to nine DC plan providers. Financial Engines, Inc. was founded in 1996 and is headquartered in Sunnyvale, California.
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