American Capital (NASDAQ: ACAS) and Northern Trust (NASDAQ:NTRS) are both financials companies, but which is the superior stock? We will contrast the two companies based on the strength of their profitabiliy, dividends, institutional ownership, risk, earnings, valuation and analyst recommendations.

Analyst Recommendations

This is a summary of recent recommendations for American Capital and Northern Trust, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
American Capital 0 1 0 0 2.00
Northern Trust 0 6 3 1 2.50

American Capital presently has a consensus price target of $17.50, indicating a potential downside of 2.72%. Northern Trust has a consensus price target of $89.25, indicating a potential upside of 0.06%. Given Northern Trust’s stronger consensus rating and higher probable upside, analysts plainly believe Northern Trust is more favorable than American Capital.

Valuation and Earnings

This table compares American Capital and Northern Trust’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
American Capital N/A N/A N/A ($0.12) -149.90
Northern Trust $5.09 billion 4.02 $984.92 million $4.29 20.79

Northern Trust has higher revenue and earnings than American Capital. American Capital is trading at a lower price-to-earnings ratio than Northern Trust, indicating that it is currently the more affordable of the two stocks.

Dividends

Northern Trust pays an annual dividend of $1.52 per share and has a dividend yield of 1.7%. American Capital does not pay a dividend. Northern Trust pays out 35.4% of its earnings in the form of a dividend.

Insider & Institutional Ownership

65.7% of American Capital shares are held by institutional investors. Comparatively, 79.5% of Northern Trust shares are held by institutional investors. 9.2% of American Capital shares are held by company insiders. Comparatively, 1.9% of Northern Trust shares are held by company 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 American Capital and Northern Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
American Capital 150.00% 12.58% 11.27%
Northern Trust 20.70% 11.19% 0.90%

Volatility and Risk

American Capital has a beta of 1, meaning that its stock price has a similar volatility profile to the S&P 500.Comparatively, Northern Trust has a beta of 1.05, meaning that its stock price is 5% more volatile than the S&P 500.

Summary

Northern Trust beats American Capital on 9 of the 14 factors compared between the two stocks.

American Capital Company Profile

Acas LLC., formerly American Capital, Ltd. (American Capital) is a global asset manager and private equity firm. American Capital, both directly and through its asset management business, originates, underwrites and manages investments in middle market private equity, leveraged finance, real estate, energy and structured products. It primarily invests in senior and mezzanine debt and equity in buyouts of private companies sponsored by the Company (American Capital One Stop Buyouts) or sponsored by other private equity funds and provide capital directly to early-stage and mature private and small public companies (Sponsor Finance and Other Investments). It also invests in first and second lien floating rate loans to the United States-based companies (Senior Floating Rate Loans or SFRL) and structured finance investments (Structured Products), including collateralized loan obligation (CLO) securities and commercial mortgages, and commercial mortgage backed securities (CMBS).

Northern Trust Company Profile

Northern Trust Corporation is a financial holding company. The Company provides asset servicing, fund administration, asset management, fiduciary and banking solutions for corporations, institutions, families and individuals across the world. Its segments include Corporate & Institutional Services (C&IS), Wealth Management, and Treasury and Other. The C&IS segment is a provider of asset servicing and related services to corporate and public retirement funds, foundations, endowments, fund managers, insurance companies, sovereign wealth funds and other institutional investors around the globe. The Wealth Management segment provides trust, investment management, custody and philanthropic services; financial consulting; guardianship and estate administration; family business consulting; family financial education; brokerage services, and private and business banking. It conducts its business through various subsidiaries.

Receive News & Ratings for American Capital Ltd. Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for American Capital Ltd. and related companies with MarketBeat.com's FREE daily email newsletter.