Medley Management (NASDAQ: MDLY) and Fifth Street Asset Management (NASDAQ:FSAM) are both small-cap financials companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, institutional ownership, profitabiliy, analyst recommendations, valuation and dividends.

Profitability

This table compares Medley Management and Fifth Street Asset Management’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Medley Management 33.22% N/A 14.30%
Fifth Street Asset Management 1.55% -527.80% 18.00%

Institutional and Insider Ownership

6.4% of Fifth Street Asset Management shares are owned by institutional investors. 89.7% of Fifth Street Asset Management shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Medley Management and Fifth Street Asset Management’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Medley Management $72.45 million 0.52 $23.59 million N/A N/A
Fifth Street Asset Management $79.14 million 0.90 $42.32 million ($0.01) -455.00

Fifth Street Asset Management has higher revenue and earnings than Medley Management.

Dividends

Fifth Street Asset Management pays an annual dividend of $0.50 per share and has a dividend yield of 11.0%. Medley Management does not pay a dividend. Fifth Street Asset Management pays out -5,000.0% of its earnings in the form of a dividend.

Analyst Ratings

This is a summary of current ratings and recommmendations for Medley Management and Fifth Street Asset Management, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Medley Management 0 5 1 0 2.17
Fifth Street Asset Management 0 1 1 0 2.50

Medley Management currently has a consensus price target of $9.21, indicating a potential upside of 38.47%. Fifth Street Asset Management has a consensus price target of $5.13, indicating a potential upside of 12.64%. Given Medley Management’s higher possible upside, equities analysts plainly believe Medley Management is more favorable than Fifth Street Asset Management.

Summary

Fifth Street Asset Management beats Medley Management on 9 of the 13 factors compared between the two stocks.

About Medley Management

Medley Management Inc. is an asset management firm offering yield solutions to retail and institutional investors. The Company operates in the investment management segment. It is focused on credit-related investment strategies, primarily originating senior secured loans to private middle market companies in the United States. The Company generally holds these loans to maturity. Its national direct origination franchise provides capital to the middle market in the United States. The Company has over $4.8 billion of assets under management (AUM) in approximately two business development companies (BDCs), Medley Capital Corporation (MCC) and Sierra Income Corporation (SIC), as well as private investment vehicles. It has over $5 billion of AUM. The Company provides capital to over 300 companies across approximately 35 industries in North America. The Company’s long-dated private funds include MOF I, MOF II and MOF III. Its private funds are managed through partnership structures

About Fifth Street Asset Management

Fifth Street Asset Management Inc. is an alternative asset manager. The Company provides asset management services to its investment funds (the Fifth Street Funds or the funds), which consist of Fifth Street Finance Corp. (FSC) and Fifth Street Senior Floating Rate Corp. (FSFR), both publicly-traded business development companies (together, the BDCs). Its segment provides asset management services to the Fifth Street Funds. The Company conducts all of its operations through its subsidiaries, Fifth Street Management LLC (FSM), Fifth Street CLO Management LLC (CLO Management) and FSCO GP LLC (FSCO GP). The funds, managed by the Company, provide financing solutions to small and mid-sized companies across their capital structures, mainly in connection with investments by private equity sponsors. It provides credit solutions across the capital structure, including one-stop financing, unitranche debt, senior secured debt, mezzanine debt, equity co-investments and venture debt financing.

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