Critical Review: Federated Investors (FII) & WisdomTree Investments (WETF)
Federated Investors (NYSE: FII) and WisdomTree Investments (NASDAQ:WETF) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, valuation, analyst recommendations, dividends, earnings and profitability.
This table compares Federated Investors and WisdomTree Investments’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a summary of current ratings and recommmendations for Federated Investors and WisdomTree Investments, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Federated Investors currently has a consensus price target of $26.67, indicating a potential downside of 13.95%. WisdomTree Investments has a consensus price target of $10.46, indicating a potential downside of 1.19%. Given WisdomTree Investments’ stronger consensus rating and higher possible upside, analysts plainly believe WisdomTree Investments is more favorable than Federated Investors.
Insider & Institutional Ownership
82.9% of Federated Investors shares are owned by institutional investors. Comparatively, 92.5% of WisdomTree Investments shares are owned by institutional investors. 7.1% of Federated Investors shares are owned by insiders. Comparatively, 16.6% of WisdomTree Investments shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
Earnings and Valuation
This table compares Federated Investors and WisdomTree Investments’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Federated Investors||$1.13 billion||2.78||$345.66 million||$2.08||14.90|
|WisdomTree Investments||$212.91 million||6.70||$55.10 million||$0.22||48.14|
Federated Investors has higher revenue and earnings than WisdomTree Investments. Federated Investors is trading at a lower price-to-earnings ratio than WisdomTree Investments, indicating that it is currently the more affordable of the two stocks.
Federated Investors pays an annual dividend of $1.00 per share and has a dividend yield of 3.2%. WisdomTree Investments pays an annual dividend of $0.32 per share and has a dividend yield of 3.0%. Federated Investors pays out 48.1% of its earnings in the form of a dividend. WisdomTree Investments pays out 145.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Federated Investors is clearly the better dividend stock, given its higher yield and lower payout ratio.
Risk and Volatility
Federated Investors has a beta of 1.45, indicating that its share price is 45% more volatile than the S&P 500. Comparatively, WisdomTree Investments has a beta of 3.15, indicating that its share price is 215% more volatile than the S&P 500.
About Federated Investors
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.
About WisdomTree Investments
WisdomTree Investments, Inc. is an asset management company that focuses on exchange-traded funds (ETFs). The Company’s family of ETFs includes funds that track its own indexes, funds that track third party indexes and actively managed funds. It operates as an exchange traded products sponsor and asset manager providing investment advisory services in the United States, Europe, Canada and Japan. These activities are reported in its U.S. Business segment that comprises its the United States business and Japan sales office, which primarily engages in selling its United States listed ETFs to Japanese institutions, and International Business segment, that comprises its European business and Canadian business. Its United States listed products include International Hedged Equity ETFs, Equity ETFs, Fixed Income ETFs, Currency ETFs, Alternative Strategy ETFs and Commodity ETFs. Its portfolio of Non-the United States listed products include WisdomTree UCITS ETFs, Boost ETPs and Canadian ETFs.
Receive News & Ratings for Federated Investors Inc. Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Federated Investors Inc. and related companies with MarketBeat.com's FREE daily email newsletter.