Franklin Resources (NYSE: BEN) and Gamco Investors (NYSE:GBL) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, risk, valuation, dividends, institutional ownership, profitabiliy and analyst recommendations.

Volatility and Risk

Franklin Resources has a beta of 1.73, indicating that its share price is 73% more volatile than the S&P 500. Comparatively, Gamco Investors has a beta of 1.06, indicating that its share price is 6% more volatile than the S&P 500.

Dividends

Franklin Resources pays an annual dividend of $0.80 per share and has a dividend yield of 1.7%. Gamco Investors pays an annual dividend of $0.08 per share and has a dividend yield of 0.3%. Franklin Resources pays out 25.8% of its earnings in the form of a dividend. Gamco Investors pays out 2.1% 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. Franklin Resources has increased its dividend for 35 consecutive years and Gamco Investors has increased its dividend for 5 consecutive years. Franklin Resources is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

45.6% of Franklin Resources shares are owned by institutional investors. Comparatively, 15.7% of Gamco Investors shares are owned by institutional investors. 21.6% of Franklin Resources shares are owned by company insiders. Comparatively, 79.0% of Gamco Investors shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings and target prices for Franklin Resources and Gamco Investors, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Franklin Resources 3 5 1 0 1.78
Gamco Investors 0 0 0 0 N/A

Franklin Resources presently has a consensus price target of $41.63, indicating a potential downside of 10.81%. Given Franklin Resources’ higher probable upside, equities analysts plainly believe Franklin Resources is more favorable than Gamco Investors.

Valuation and Earnings

This table compares Franklin Resources and Gamco Investors’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Franklin Resources $6.41 billion 4.09 $2.35 billion $3.10 15.05
Gamco Investors $357.53 million 2.49 $188.67 million $3.85 8.01

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

Profitability

This table compares Franklin Resources and Gamco Investors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Franklin Resources 27.77% 14.34% 10.86%
Gamco Investors 32.42% -46.35% 60.28%

Summary

Franklin Resources beats Gamco Investors on 11 of the 16 factors compared between the two stocks.

Franklin Resources Company Profile

Franklin Resources, Inc. is a holding company. The Company, along with its subsidiaries, operates as Franklin Templeton Investments. It is a global investment management company that provides investment management and related services to retail, institutional and high net-worth clients in jurisdictions around the world. The Company offers its investment products and services under the Franklin, Templeton, Franklin Mutual Series, Franklin Bissett, Fiduciary Trust, Darby, Balanced Equity Management, K2 and LibertyShares brand names. Its products include investment funds and institutional, high net-worth and separately managed accounts (collectively, sponsored investment products (SIPs)). It offers various types of SIPs, such as the United States funds, cross-border funds, local/regional funds, and other managed accounts, alternative investment products and trusts. Its investment funds include the United States-registered funds, non-United States-registered funds and unregistered funds.

Gamco Investors Company Profile

GAMCO Investors, Inc. is a holding company. The Company is a provider of investment advisory services to open and closed-end funds, institutional and private wealth management investors principally in the United States. The Company operates through the investment advisory and asset management business segment. It manages assets on a discretionary basis and invests in securities through various investment styles. Its assets under management are organized into three groups: Institutional and Private Wealth Management; Open and Closed-End Funds, and the GAMCO International SICAV (SICAV). The Company provides advisory services to a range of investors, including corporate retirement plans, foundations, endowments and private wealth clients, and also serves as sub-advisor to third-party investment funds, including registered investment companies. As of December 31, 2016, it had provided advisory services to 21 open-end funds, 15 closed-end funds and one exchange traded managed fund.

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