Pzena Investment Management (NYSE: PZN) and Medley Management (NYSE:MDLY) 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, risk, valuation, institutional ownership, earnings and profitabiliy.

Analyst Recommendations

This is a breakdown of recent ratings for Pzena Investment Management and Medley 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
Medley Management 0 3 1 0 2.25

Medley Management has a consensus price target of $9.06, suggesting a potential upside of 41.60%. Given Medley Management’s stronger consensus rating and higher probable upside, analysts plainly believe Medley Management is more favorable than Pzena Investment Management.

Dividends

Pzena Investment Management pays an annual dividend of $0.12 per share and has a dividend yield of 1.2%. Medley Management pays an annual dividend of $0.80 per share and has a dividend yield of 12.5%. Pzena Investment Management pays out 18.2% of its earnings in the form of a dividend. Medley Management pays out 800.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Risk & Volatility

Pzena Investment Management has a beta of 1.68, suggesting that its share price is 68% more volatile than the S&P 500. Comparatively, Medley Management has a beta of 1.37, suggesting that its share price is 37% more volatile than the S&P 500.

Valuation and Earnings

This table compares Pzena Investment Management and Medley Management’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Pzena Investment Management $122.22 million 1.47 $56.40 million $0.66 15.67
Medley Management $72.45 million 0.50 $23.59 million $0.10 64.01

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

Profitability

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

Net Margins Return on Equity Return on Assets
Pzena Investment Management 14.82% 13.48% 6.69%
Medley Management 1.79% -51.09% 19.92%

Insider & Institutional Ownership

16.8% of Pzena Investment Management shares are owned by institutional investors. Comparatively, 73.1% of Medley Management shares are owned by institutional investors. 57.4% of Pzena Investment Management shares are owned by company insiders. Comparatively, 5.1% of Medley Management shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Summary

Pzena Investment Management beats Medley Management on 9 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.

Medley Management Company Profile

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

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