State Street Corporation (NYSE: STT) and Affiliated Managers Group (NYSE:AMG) are both mid-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their profitability, dividends, earnings, risk, valuation, analyst recommendations and institutional ownership.

Dividends

State Street Corporation pays an annual dividend of $1.52 per share and has a dividend yield of 1.7%. Affiliated Managers Group pays an annual dividend of $0.80 per share and has a dividend yield of 0.5%. State Street Corporation pays out 28.1% 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. Affiliated Managers Group has increased its dividend for 6 consecutive years.

Institutional & Insider Ownership

87.4% of State Street Corporation shares are owned by institutional investors. Comparatively, 96.2% of Affiliated Managers Group shares are owned by institutional investors. 0.7% of State Street Corporation shares are owned by insiders. Comparatively, 1.4% of Affiliated Managers Group shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and price targets for State Street Corporation and Affiliated Managers Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
State Street Corporation 1 9 3 1 2.29
Affiliated Managers Group 0 2 5 0 2.71

State Street Corporation presently has a consensus price target of $92.00, indicating a potential upside of 1.13%. Affiliated Managers Group has a consensus price target of $196.86, indicating a potential upside of 13.99%. Given Affiliated Managers Group’s stronger consensus rating and higher possible upside, analysts clearly believe Affiliated Managers Group is more favorable than State Street Corporation.

Profitability

This table compares State Street Corporation and Affiliated Managers Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
State Street Corporation 19.97% 12.49% 0.95%
Affiliated Managers Group 22.99% 17.45% 8.75%

Earnings & Valuation

This table compares State Street Corporation and Affiliated Managers Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
State Street Corporation $10.63 billion 3.20 $2.02 billion $5.40 16.85
Affiliated Managers Group $2.21 billion 4.37 $842.60 million $9.02 19.15

State Street Corporation has higher revenue and earnings than Affiliated Managers Group. State Street Corporation 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.

Risk & Volatility

State Street Corporation has a beta of 1.31, indicating that its stock price is 31% more volatile than the S&P 500. Comparatively, Affiliated Managers Group has a beta of 1.66, indicating that its stock price is 66% more volatile than the S&P 500.

Summary

Affiliated Managers Group beats State Street Corporation on 13 of the 18 factors compared between the two stocks.

About State Street Corporation

State Street Corporation is a financial holding company. The Company operates through two lines of business: Investment Servicing and Investment Management. The Company, through its subsidiary, State Street Bank and Trust Company (State Street Bank), provides a range of financial products and services to institutional investors across the world. Investment servicing line of business performs functions, such as providing institutional investors with clearing, settlement and payment services. The Company operates investment management line of business through State Street Global Advisors (SSGA). SSGA provides a range of investment management, investment research and investment advisory services to corporations, public funds and other investors. Its clients include mutual funds, collective investment funds and other investment pools, corporate and public retirement plans, insurance companies, foundations, endowments and investment managers.

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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