Greenhill & Co. (NYSE: GHL) and JMP Group (NYSE:JMP) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, analyst recommendations, profitability, dividends, institutional ownership, earnings and valuation.

Valuation & Earnings

This table compares Greenhill & Co. and JMP Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Greenhill & Co. $299.08 million 1.39 $39.42 million $1.33 10.56
JMP Group $119.55 million 0.96 -$11.63 million ($0.54) -9.83

Greenhill & Co. has higher revenue and earnings than JMP Group. JMP Group is trading at a lower price-to-earnings ratio than Greenhill & Co., indicating that it is currently the more affordable of the two stocks.

Dividends

Greenhill & Co. pays an annual dividend of $1.80 per share and has a dividend yield of 12.8%. JMP Group pays an annual dividend of $0.36 per share and has a dividend yield of 6.8%. Greenhill & Co. pays out 135.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. JMP Group pays out -66.7% of its earnings in the form of a dividend. Greenhill & Co. has increased its dividend for 7 consecutive years. Greenhill & Co. is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Greenhill & Co. and JMP Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Greenhill & Co. 13.98% 15.68% 10.43%
JMP Group -10.35% 1.52% 0.19%

Risk & Volatility

Greenhill & Co. has a beta of 1.3, indicating that its stock price is 30% more volatile than the S&P 500. Comparatively, JMP Group has a beta of 0.91, indicating that its stock price is 9% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations and price targets for Greenhill & Co. and JMP Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Greenhill & Co. 5 1 0 0 1.17
JMP Group 0 0 0 0 N/A

Greenhill & Co. presently has a consensus price target of $21.17, indicating a potential upside of 50.65%. Given Greenhill & Co.’s higher possible upside, equities analysts clearly believe Greenhill & Co. is more favorable than JMP Group.

Insider and Institutional Ownership

97.1% of Greenhill & Co. shares are held by institutional investors. Comparatively, 13.0% of JMP Group shares are held by institutional investors. 8.3% of Greenhill & Co. shares are held by insiders. Comparatively, 52.1% of JMP Group shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

Greenhill & Co. beats JMP Group on 12 of the 15 factors compared between the two stocks.

Greenhill & Co. Company Profile

Greenhill & Co., Inc. is an investment bank. The Company provides financial and strategic advice on domestic and cross-border mergers and acquisitions, divestitures, restructurings, financings, capital raising and other transactions to a diverse client base, including corporations, partnerships, institutions and governments globally. The Company also provides advice in connection with defense preparedness, activist response strategies and other mission critical situations. The Company acts for clients located across the world from its offices located in the United States, Australia, Brazil, Canada, Germany, Hong Kong, Japan, Sweden, and the United Kingdom. The Company’s subsidiaries provide advisory services in various jurisdictions. Its operating entities include Greenhill & Co., LLC (G&Co), Greenhill & Co. International LLP (GCI), Greenhill & Co. Europe LLP (GCE), Greenhill & Co. Australia Pty Limited (Greenhill Australia) and Greenhill Cogent, LP (GC LP).

JMP Group Company Profile

JMP Group, Inc. is a full-service investment banking and asset management firm. The Company operates in five segments: Broker-Dealer, Asset Management, Corporate Credit, Investment Income and Corporate Costs. The Broker-Dealer segment includes a range of services, such as underwriting and acting as a placement agent for public and private capital markets raising transactions and financial advisory services in mergers and acquisitions, restructuring and other strategic transactions. The Asset Management segment includes the management of a range of pooled investment vehicles. The Corporate Credit segment includes the management of collateralized loan obligations and small business loans. The Investment Income segment includes income from the Company’s principal investments in public and private securities. The Corporate Costs segment includes expenses related to JMP Group Inc., the holding company, and JMP Group LLC, and comprises corporate overhead expenses and interest expense.

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