Pzena Investment Management (NYSE: PZN) and Artisan Partners Asset Management (NYSE:APAM) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, risk, profitabiliy, earnings and valuation.

Dividends

Pzena Investment Management pays an annual dividend of $0.12 per share and has a dividend yield of 1.1%. Artisan Partners Asset Management pays an annual dividend of $2.40 per share and has a dividend yield of 7.6%. Pzena Investment Management pays out 20.0% of its earnings in the form of a dividend. Artisan Partners Asset Management pays out 151.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Volatility and Risk

Pzena Investment Management has a beta of 1.67, suggesting that its share price is 67% more volatile than the S&P 500. Comparatively, Artisan Partners Asset Management has a beta of 1.73, suggesting that its share price is 73% more volatile than the S&P 500.

Insider and Institutional Ownership

16.9% of Pzena Investment Management shares are held by institutional investors. Comparatively, 98.2% of Artisan Partners Asset Management shares are held by institutional investors. 55.9% of Pzena Investment Management shares are held by company insiders. Comparatively, 40.3% of Artisan Partners Asset Management shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Pzena Investment Management and Artisan Partners Asset Management, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pzena Investment Management 0 1 0 0 2.00
Artisan Partners Asset Management 1 4 2 0 2.14

Artisan Partners Asset Management has a consensus price target of $29.07, indicating a potential downside of 8.07%. Given Artisan Partners Asset Management’s stronger consensus rating and higher possible upside, analysts clearly believe Artisan Partners Asset Management is more favorable than Pzena Investment Management.

Valuation & Earnings

This table compares Pzena Investment Management and Artisan Partners Asset Management’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Pzena Investment Management $114.54 million 1.64 $51.06 million $0.60 18.00
Artisan Partners Asset Management $730.40 million 2.13 $242.89 million $1.58 20.02

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

Profitability

This table compares Pzena Investment Management and Artisan Partners Asset Management’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Pzena Investment Management 14.75% 12.70% 6.55%
Artisan Partners Asset Management 10.47% 61.99% 7.56%

Summary

Artisan Partners Asset Management beats Pzena Investment Management on 12 of the 16 factors compared between the two stocks.

Pzena Investment Management Company Profile

Pzena Investment Management, Inc. is a holding company. The Company is the sole managing member of Pzena Investment Management, LLC. Pzena Investment Management, LLC is an investment management company. The Company also serves as the general partner of Pzena Investment Management, LP. The Company offers institutional investment products to public and corporate pension funds, endowments, foundations and certain commingled vehicles geared toward institutional investors. The Company also offers access to certain of its global and non-United States strategies through private placement vehicles and collective investment trusts. Pzena Investment Management, LLC is its operating company. Pzena Investment Management, LLC consists of Class A and Class B membership units.

Artisan Partners Asset Management Company Profile

Artisan Partners Asset Management Inc. is an investment management company. The Company provides a range of the United States, non-United States and global investment strategies, each of which is managed by one of its investment teams. The Company provides investment management services to separate accounts, mutual funds and other pooled investment vehicles. The Company offers its investment management services primarily to institutions and through intermediaries that operate with institutional-like decision-making processes and have long-term investment horizons. The Company provides clients with multiple equity investment strategies spanning market capitalization segments and investing styles in both the United States and non-United States markets. The Company also offers one fixed income strategy, the Artisan High Income strategy. Each strategy is managed by one of the investment teams.

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