Eaton Vance Corporation (NYSE: EV) and Financial Engines (NASDAQ:FNGN) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, profitability, institutional ownership, valuation, dividends, analyst recommendations and risk.

Profitability

This table compares Eaton Vance Corporation and Financial Engines’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Eaton Vance Corporation 18.03% 34.47% 13.99%
Financial Engines 8.98% 7.31% 6.64%

Analyst Recommendations

This is a breakdown of recent ratings for Eaton Vance Corporation and Financial Engines, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Eaton Vance Corporation 0 5 1 0 2.17
Financial Engines 0 0 5 0 3.00

Eaton Vance Corporation currently has a consensus target price of $49.58, indicating a potential upside of 8.43%. Financial Engines has a consensus target price of $43.00, indicating a potential upside of 36.94%. Given Financial Engines’ stronger consensus rating and higher probable upside, analysts plainly believe Financial Engines is more favorable than Eaton Vance Corporation.

Earnings & Valuation

This table compares Eaton Vance Corporation and Financial Engines’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Eaton Vance Corporation $1.47 billion 3.46 $478.59 million $2.30 19.88
Financial Engines $458.22 million 4.33 $84.14 million $0.64 49.06

Eaton Vance Corporation has higher revenue and earnings than Financial Engines. Eaton Vance Corporation is trading at a lower price-to-earnings ratio than Financial Engines, indicating that it is currently the more affordable of the two stocks.

Dividends

Eaton Vance Corporation pays an annual dividend of $1.12 per share and has a dividend yield of 2.4%. Financial Engines pays an annual dividend of $0.28 per share and has a dividend yield of 0.9%. Eaton Vance Corporation pays out 48.7% of its earnings in the form of a dividend. Financial Engines pays out 43.8% 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. Eaton Vance Corporation has increased its dividend for 36 consecutive years. Eaton Vance Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Eaton Vance Corporation has a beta of 1.85, suggesting that its stock price is 85% more volatile than the S&P 500. Comparatively, Financial Engines has a beta of 2.22, suggesting that its stock price is 122% more volatile than the S&P 500.

Institutional and Insider Ownership

68.9% of Eaton Vance Corporation shares are owned by institutional investors. 16.0% of Financial Engines shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

Eaton Vance Corporation beats Financial Engines on 9 of the 17 factors compared between the two stocks.

Eaton Vance Corporation Company Profile

Eaton Vance Corp. is engaged in the business of managing investment funds and providing investment management and advisory services to high-net-worth individuals and institutions. The Company operates as an investment advisor to funds and separate accounts. The Company, through its subsidiaries and other affiliates, manages active equity, income and alternative strategies across a range of investment styles and asset classes, including the United States and global equities, floating-rate bank loans, municipal bonds, global income, high-yield and investment grade bonds. Through its subsidiary, the Company also manages a range of engineered alpha strategies, including systematic equity, systematic alternatives and managed options strategies. The Company’s open-end fund lineup includes tax-managed equity funds, and non-tax-managed equity and multi-asset funds. The Company’s family of closed-end funds includes municipal bond, domestic and global equity, and bank loan.

Financial Engines Company Profile

Financial Engines, Inc. is a provider of independent, technology-enabled financial advisory services, discretionary portfolio management, personalized investment advice, financial and retirement income planning, and financial education and guidance. The Company offers personalized plans for saving, investing, and generating retirement income, as well as by providing assessments of retirement income needs and readiness. The Company’s advice and planning services cover employer-sponsored defined contribution (DC) accounts (401(k), 457, and 403(b) plans), individual retirement account (IRA) accounts, and taxable accounts. For individuals, the Company provides discretionary portfolio management, personalized investment advice, financial and retirement income planning, financial education and guidance. The Company maintains two types of relationships with individuals: DC plan participants in the workplace and Individuals outside the workplace.

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