Ameriprise Financial Services (NYSE: AMP) and American Capital (NASDAQ:ACAS) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, valuation, dividends, profitability, institutional ownership, analyst recommendations and risk.

Risk & Volatility

Ameriprise Financial Services has a beta of 1.86, suggesting that its stock price is 86% more volatile than the S&P 500. Comparatively, American Capital has a beta of 1, suggesting that its stock price has a similar volatility profile to the S&P 500.

Institutional and Insider Ownership

81.7% of Ameriprise Financial Services shares are held by institutional investors. Comparatively, 65.7% of American Capital shares are held by institutional investors. 1.5% of Ameriprise Financial Services shares are held by insiders. Comparatively, 9.2% of American Capital shares are held 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.

Earnings and Valuation

This table compares Ameriprise Financial Services and American Capital’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Ameriprise Financial Services $12.00 billion 1.79 $2.90 billion $8.78 16.33
American Capital N/A N/A N/A ($0.12) -149.90

Ameriprise Financial Services has higher revenue and earnings than American Capital. American Capital is trading at a lower price-to-earnings ratio than Ameriprise Financial Services, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Ameriprise Financial Services and American Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ameriprise Financial Services 11.81% 26.54% 1.20%
American Capital 150.00% 12.58% 11.27%

Dividends

Ameriprise Financial Services pays an annual dividend of $3.32 per share and has a dividend yield of 2.3%. American Capital does not pay a dividend. Ameriprise Financial Services pays out 37.8% of its earnings in the form of a dividend. Ameriprise Financial Services has raised its dividend for 7 consecutive years.

Analyst Ratings

This is a summary of current recommendations and price targets for Ameriprise Financial Services and American Capital, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ameriprise Financial Services 1 4 4 0 2.33
American Capital 0 0 0 0 N/A

Ameriprise Financial Services currently has a consensus target price of $145.85, suggesting a potential upside of 1.74%. Given Ameriprise Financial Services’ higher probable upside, equities analysts plainly believe Ameriprise Financial Services is more favorable than American Capital.

Summary

Ameriprise Financial Services beats American Capital on 9 of the 13 factors compared between the two stocks.

About Ameriprise Financial Services

Ameriprise Financial, Inc. is a financial services company that offers financial solutions to individual and institutional clients. The Company operates in five segments: Advice & Wealth Management; Asset Management; Annuities; Protection, and Corporate & Other. The Company uses Ameriprise Financial as its enterprise brand, as well as the name of its advisor network and certain of its retail products and services. The retail products and services that use the Ameriprise Financial brand include those that it provides through its advisors (financial planning, investment advisory accounts and retail brokerage services) and products and services that the Company markets directly to consumers or through affinity groups (personal auto and home insurance). The Company uses its RiverSource brand for its annuity and protection products issued by the RiverSource Life companies, including its life and disability income insurance products.

About American Capital

Acas LLC., formerly American Capital, Ltd. (American Capital) is a global asset manager and private equity firm. American Capital, both directly and through its asset management business, originates, underwrites and manages investments in middle market private equity, leveraged finance, real estate, energy and structured products. It primarily invests in senior and mezzanine debt and equity in buyouts of private companies sponsored by the Company (American Capital One Stop Buyouts) or sponsored by other private equity funds and provide capital directly to early-stage and mature private and small public companies (Sponsor Finance and Other Investments). It also invests in first and second lien floating rate loans to the United States-based companies (Senior Floating Rate Loans or SFRL) and structured finance investments (Structured Products), including collateralized loan obligation (CLO) securities and commercial mortgages, and commercial mortgage backed securities (CMBS).

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