Analyzing Virtus Investment Partners (VRTS) & Financial Engines (FNGN)

Virtus Investment Partners (NASDAQ: VRTS) and Financial Engines (NASDAQ:FNGN) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, profitability, dividends, earnings, valuation, institutional ownership and risk.

Earnings & Valuation

This table compares Virtus Investment Partners and Financial Engines’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Virtus Investment Partners $336.08 million 2.62 $73.41 million $5.14 23.74
Financial Engines $458.22 million 5.07 $84.14 million $0.64 57.50

Financial Engines has higher revenue and earnings than Virtus Investment Partners. Virtus Investment Partners is trading at a lower price-to-earnings ratio than Financial Engines, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Virtus Investment Partners and Financial Engines’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Virtus Investment Partners 12.13% 11.35% 3.84%
Financial Engines 8.98% 7.31% 6.64%

Risk and Volatility

Virtus Investment Partners has a beta of 1.76, suggesting that its share price is 76% more volatile than the S&P 500. Comparatively, Financial Engines has a beta of 2.2, suggesting that its share price is 120% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Virtus Investment Partners and Financial Engines, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Virtus Investment Partners 0 5 0 0 2.00
Financial Engines 0 0 5 0 3.00

Virtus Investment Partners currently has a consensus price target of $128.60, indicating a potential upside of 5.41%. Financial Engines has a consensus price target of $43.00, indicating a potential upside of 16.85%. Given Financial Engines’ stronger consensus rating and higher possible upside, analysts plainly believe Financial Engines is more favorable than Virtus Investment Partners.

Institutional and Insider Ownership

95.9% of Virtus Investment Partners shares are owned by institutional investors. 4.0% of Virtus Investment Partners shares are owned by company insiders. Comparatively, 9.3% of Financial Engines 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.

Dividends

Virtus Investment Partners pays an annual dividend of $1.80 per share and has a dividend yield of 1.5%. Financial Engines pays an annual dividend of $0.28 per share and has a dividend yield of 0.8%. Virtus Investment Partners pays out 35.0% of its earnings in the form of a dividend. Financial Engines pays out 43.8% 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. Virtus Investment Partners is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Financial Engines beats Virtus Investment Partners on 10 of the 16 factors compared between the two stocks.

About Virtus Investment Partners

Virtus Investment Partners, Inc. (Virtus) is a provider of investment management and related services to individuals and institutions. The Company provides its products in various forms and through multiple distribution channels. Its retail products include open-end mutual funds, closed-end funds, exchange traded funds, variable insurance funds, undertakings for collective investments in transferable securities (UCITS) and separately managed accounts. Its open-end mutual funds are distributed through intermediaries. Its closed-end funds trade on the New York Stock Exchange. Its variable insurance funds are available as investment options in variable annuities and life insurance products distributed by life insurance companies. Separately managed accounts consists of intermediary programs, sponsored and distributed by unaffiliated brokerage firms, and private client accounts, which are offered to the high net-worth clients of its affiliated managers.

About Financial Engines

Financial Engines, Inc. is a provider of independent, technology-enabled financial advisory services, discretionary portfolio management, personalized investment advice, financial and retirement income planning, and financial education and guidance. The Company offers personalized plans for saving, investing, and generating retirement income, as well as by providing assessments of retirement income needs and readiness. The Company’s advice and planning services cover employer-sponsored defined contribution (DC) accounts (401(k), 457, and 403(b) plans), individual retirement account (IRA) accounts, and taxable accounts. For individuals, the Company provides discretionary portfolio management, personalized investment advice, financial and retirement income planning, financial education and guidance. The Company maintains two types of relationships with individuals: DC plan participants in the workplace and Individuals outside the workplace.

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