Comparing Federated Investors (NYSE:FII) & Blackstone Group (BX)

Federated Investors (NYSE: FII) and Blackstone Group (NYSE:BX) are both mid-cap financials companies, but which is the superior stock? We will compare the two companies based on the strength of their profitability, valuation, earnings, analyst recommendations, dividends, institutional ownership and risk.

Institutional and Insider Ownership

85.2% of Federated Investors shares are owned by institutional investors. Comparatively, 46.4% of Blackstone Group shares are owned by institutional investors. 7.1% of Federated Investors shares are owned by insiders. Comparatively, 1.0% of Blackstone Group shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Federated Investors and Blackstone Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Federated Investors 19.32% 34.54% 18.68%
Blackstone Group 22.88% 19.71% 8.71%

Volatility and Risk

Federated Investors has a beta of 1.56, meaning that its stock price is 56% more volatile than the S&P 500. Comparatively, Blackstone Group has a beta of 1.34, meaning that its stock price is 34% more volatile than the S&P 500.

Dividends

Federated Investors pays an annual dividend of $1.00 per share and has a dividend yield of 2.8%. Blackstone Group pays an annual dividend of $1.76 per share and has a dividend yield of 5.5%. Federated Investors pays out 47.2% of its earnings in the form of a dividend. Blackstone Group pays out 76.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Blackstone Group has increased its dividend for 4 consecutive years. Blackstone Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of recent ratings for Federated Investors and Blackstone Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Federated Investors 2 6 0 0 1.75
Blackstone Group 0 1 8 0 2.89

Federated Investors presently has a consensus price target of $28.29, suggesting a potential downside of 21.60%. Blackstone Group has a consensus price target of $38.56, suggesting a potential upside of 20.41%. Given Blackstone Group’s stronger consensus rating and higher possible upside, analysts clearly believe Blackstone Group is more favorable than Federated Investors.

Earnings & Valuation

This table compares Federated Investors and Blackstone Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Federated Investors $1.14 billion 3.18 $208.91 million $2.12 17.02
Blackstone Group $5.13 billion 3.94 $1.04 billion $2.31 13.86

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

Summary

Blackstone Group beats Federated Investors on 10 of the 17 factors compared between the two stocks.

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.

About Blackstone Group

The Blackstone Group L.P. is a global alternative asset manager. The Company’s alternative asset management businesses include investment vehicles focused on private equity, non-investment grade credit, secondary private equity funds of funds and multi-asset class strategies. It operates through four segments: Private Equity, Real Estate, Hedge Fund Solutions and Credit. The Private Equity segment includes its corporate private equity business, which consists of its corporate private equity funds, Blackstone Capital Partners (BCP) funds, its sector-focused corporate private equity funds, including its energy-focused funds, Blackstone Energy Partners (BEP) funds and its core private equity fund. The Blackstone Real Estate Partners funds target a range of opportunistic real estate and real estate related investments. The Hedge Fund Solutions segment consists of Blackstone Alternative Asset Management (BAAM). The Credit segment consists principally of GSO Capital Partners LP (GSO).

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