Federated Investors (NYSE: FII) and Medley Management (NYSE:MDLY) are both financials companies, but which is the better business? We will compare the two companies based on the strength of their dividends, analyst recommendations, valuation, profitability, earnings, institutional ownership and risk.

Dividends

Federated Investors pays an annual dividend of $1.00 per share and has a dividend yield of 3.3%. Medley Management pays an annual dividend of $0.80 per share and has a dividend yield of 12.5%. Federated Investors pays out 48.1% of its earnings in the form of a dividend. Medley Management pays out 421.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a breakdown of recent ratings for Federated Investors and Medley Management, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Federated Investors 2 4 0 0 1.67
Medley Management 0 3 0 0 2.00

Federated Investors presently has a consensus target price of $23.50, indicating a potential downside of 21.93%. Medley Management has a consensus target price of $9.75, indicating a potential upside of 52.34%. Given Medley Management’s stronger consensus rating and higher possible upside, analysts clearly believe Medley Management is more favorable than Federated Investors.

Volatility & Risk

Federated Investors has a beta of 1.45, indicating that its share price is 45% more volatile than the S&P 500. Comparatively, Medley Management has a beta of 1.36, indicating that its share price is 36% more volatile than the S&P 500.

Valuation & Earnings

This table compares Federated Investors and Medley Management’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Federated Investors $1.13 billion 2.70 $345.66 million $2.08 14.47
Medley Management $67.57 million 0.50 $27.69 million $0.19 33.69

Federated Investors has higher revenue and earnings than Medley Management. Federated Investors is trading at a lower price-to-earnings ratio than Medley Management, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Federated Investors and Medley Management’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Federated Investors 20.04% 33.07% 19.28%
Medley Management 2.68% -43.71% 17.11%

Institutional and Insider Ownership

82.9% of Federated Investors shares are owned by institutional investors. Comparatively, 65.6% of Medley Management shares are owned by institutional investors. 7.1% of Federated Investors shares are owned by company insiders. Comparatively, 5.1% of Medley Management shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Federated Investors beats Medley Management on 11 of the 15 factors compared between the two stocks.

Federated Investors Company Profile

Federated Investors, Inc. (Federated) is a provider of investment management products and related financial services. Federated operates through investment management business segment. It is engaged in sponsoring, marketing and providing investment-related services to various investment products, including mutual funds and Separate Accounts, which include separately managed accounts, institutional accounts, sub-advised funds and other managed products. It operates in one segment, the investment management business. As of December 31, 2016, Federated provided investment advisory services to 124 sponsored investment companies and other funds (Federated Funds). It markets these funds to banks, brokers and dealers and other financial intermediaries using them to meet the needs of their customers and clients, including retail investors, corporations and retirement plans. The Company offers a range of products and strategies, including money market, equity and fixed-income investments.

Medley Management Company Profile

Medley Management Inc. is an asset management firm offering yield solutions to retail and institutional investors. The Company operates in the investment management segment. It is focused on credit-related investment strategies, primarily originating senior secured loans to private middle market companies in the United States. The Company generally holds these loans to maturity. Its national direct origination franchise provides capital to the middle market in the United States. The Company has over $4.8 billion of assets under management (AUM) in approximately two business development companies (BDCs), Medley Capital Corporation (MCC) and Sierra Income Corporation (SIC), as well as private investment vehicles. It has over $5 billion of AUM. The Company provides capital to over 300 companies across approximately 35 industries in North America. The Company’s long-dated private funds include MOF I, MOF II and MOF III. Its private funds are managed through partnership structures

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