Garrison Capital (NASDAQ: GARS) and Affiliated Managers Group (NYSE:AMG) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, valuation, profitabiliy, risk, dividends and earnings.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Garrison Capital and Affiliated Managers Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Garrison Capital 0 7 1 0 2.13
Affiliated Managers Group 0 2 5 0 2.71

Garrison Capital presently has a consensus target price of $10.13, suggesting a potential upside of 27.36%. Affiliated Managers Group has a consensus target price of $194.57, suggesting a potential upside of 7.71%. Given Garrison Capital’s higher possible upside, research analysts clearly believe Garrison Capital is more favorable than Affiliated Managers Group.

Institutional & Insider Ownership

23.8% of Garrison Capital shares are owned by institutional investors. Comparatively, 94.9% of Affiliated Managers Group shares are owned by institutional investors. 5.8% of Garrison Capital shares are owned by insiders. Comparatively, 1.4% of Affiliated Managers Group shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Garrison Capital and Affiliated Managers Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Garrison Capital -14.93% 8.71% 4.15%
Affiliated Managers Group 22.99% 17.45% 8.75%

Risk and Volatility

Garrison Capital has a beta of 0.25, suggesting that its share price is 75% less volatile than the S&P 500. Comparatively, Affiliated Managers Group has a beta of 1.65, suggesting that its share price is 65% more volatile than the S&P 500.

Dividends

Garrison Capital pays an annual dividend of $1.12 per share and has a dividend yield of 14.1%. Affiliated Managers Group pays an annual dividend of $0.80 per share and has a dividend yield of 0.4%. Garrison Capital pays out -302.7% of its earnings in the form of a dividend. Affiliated Managers Group pays out 8.9% 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. Garrison Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares Garrison Capital and Affiliated Managers Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Garrison Capital N/A N/A N/A ($0.37) -21.49
Affiliated Managers Group $2.21 billion 4.60 $842.80 million $9.02 20.03

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

Summary

Affiliated Managers Group beats Garrison Capital on 10 of the 14 factors compared between the two stocks.

About Garrison Capital

Garrison Capital Inc. is a managed, closed-end, non-diversified management investment company. The Company’s investment objective is to generate current income and capital appreciation by making investments primarily in debt securities and loans of the United States-based middle-market companies, which it defines as those having annual earnings before interest, taxes and depreciation, or EBITDA, of certain amount. It invests or provides direct lending in first lien senior secured loans, second lien senior secured loans, one-stop senior secured loans or unitranche loans, subordinated or mezzanine loans, unsecured consumer loans and to a lesser extent, selected equity co-investments in middle-market companies. The Company intends to generate risk-adjusted net returns by assembling a portfolio of investments. The Company’s investment advisor is Garrison Capital Advisers LLC.

About Affiliated Managers Group

Affiliated Managers Group, Inc. is an asset management company with equity investments in boutique investment management firms. The Company operates in three segments, which represent its principal distribution channels: Institutional, Mutual Fund and High Net Worth. The equity method investments in the Institutional distribution channel are made in relationships with public and private client entities, including foundations, endowments, sovereign wealth funds and retirement plans for corporations and municipalities. The equity method investments in the Mutual Fund distribution channel are made in advisory or sub-advisory relationships with active return-oriented mutual funds, Undertakings for Collective Investment in Transferable Securities and other retail products. The equity method investments in the High Net Worth distribution channel are made in relationships with high net worth and ultra-high net worth individuals, families, trusts, foundations, endowments and retirement plans.

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