Legg Mason (NYSE: LM) is one of 53 publicly-traded companies in the “Investment Management & Fund Operators” industry, but how does it contrast to its competitors? We will compare Legg Mason to similar businesses based on the strength of its analyst recommendations, profitability, earnings, risk, dividends, valuation and institutional ownership.

Insider & Institutional Ownership

82.3% of Legg Mason shares are owned by institutional investors. Comparatively, 62.0% of shares of all “Investment Management & Fund Operators” companies are owned by institutional investors. 12.7% of Legg Mason shares are owned by company insiders. Comparatively, 10.4% of shares of all “Investment Management & Fund Operators” companies are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Legg Mason and its competitors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Legg Mason 8.21% 6.84% 3.35%
Legg Mason Competitors -46.91% 10.48% 5.74%

Earnings and Valuation

This table compares Legg Mason and its competitors revenue, earnings per share and valuation.

Gross Revenue EBITDA Price/Earnings Ratio
Legg Mason $2.98 billion $572.31 million 15.85
Legg Mason Competitors $3.00 billion $961.92 million 6.61

Legg Mason’s competitors have higher revenue and earnings than Legg Mason. Legg Mason is trading at a higher price-to-earnings ratio than its competitors, indicating that it is currently more expensive than other companies in its industry.

Dividends

Legg Mason pays an annual dividend of $1.12 per share and has a dividend yield of 2.9%. Legg Mason pays out 46.5% of its earnings in the form of a dividend. As a group, “Investment Management & Fund Operators” companies pay a dividend yield of 2.8% and pay out 49.4% of their earnings in the form of a dividend. Legg Mason has increased its dividend for 7 consecutive years. Legg Mason is clearly a better dividend stock than its competitors, given its higher yield and lower payout ratio.

Volatility and Risk

Legg Mason has a beta of 2.21, meaning that its share price is 121% more volatile than the S&P 500. Comparatively, Legg Mason’s competitors have a beta of 1.23, meaning that their average share price is 23% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings for Legg Mason and its competitors, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Legg Mason 2 3 4 0 2.22
Legg Mason Competitors 357 1779 1798 62 2.39

Legg Mason presently has a consensus target price of $42.50, suggesting a potential upside of 11.23%. As a group, “Investment Management & Fund Operators” companies have a potential upside of 6.17%. Given Legg Mason’s higher possible upside, equities research analysts plainly believe Legg Mason is more favorable than its competitors.

Summary

Legg Mason beats its competitors on 8 of the 15 factors compared.

Legg Mason Company Profile

Legg Mason, Inc. is a holding company. The Company and its subsidiaries are principally engaged in providing asset management and related financial services to individuals, institutions, corporations and municipalities. The Company operates through Global Asset Management segment. Global Asset Management provides investment advisory services to institutional and individual clients and to the Company-sponsored investment funds. The Company, through its subsidiaries, provides investment management and related services to institutional and individual clients, Company-sponsored investment funds and retail separately managed account programs. It offers its products and services directly and through various financial intermediaries. It has operations principally in the United States and the United Kingdom and also has offices in Australia, Bahamas, Brazil, Canada, Chile, China, Dubai, France, Germany, Italy, Japan, Luxembourg, Poland, Singapore, Spain, Switzerland and Taiwan.

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