The Carlyle Group L.P. (NASDAQ: CG) and Financial Engines (NASDAQ:FNGN) are both mid-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, dividends, profitability, risk, valuation, earnings and analyst recommendations.

Institutional and Insider Ownership

40.7% of The Carlyle Group L.P. shares are held by institutional investors. 16.0% of Financial Engines shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings for The Carlyle Group L.P. and Financial Engines, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The Carlyle Group L.P. 0 5 4 0 2.44
Financial Engines 0 0 5 0 3.00

The Carlyle Group L.P. currently has a consensus price target of $23.50, indicating a potential downside of 2.08%. Financial Engines has a consensus price target of $43.00, indicating a potential upside of 17.17%. Given Financial Engines’ stronger consensus rating and higher possible upside, analysts clearly believe Financial Engines is more favorable than The Carlyle Group L.P..

Profitability

This table compares The Carlyle Group L.P. and Financial Engines’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
The Carlyle Group L.P. 4.13% 41.32% 7.03%
Financial Engines 8.98% 7.31% 6.64%

Valuation & Earnings

This table compares The Carlyle Group L.P. and Financial Engines’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
The Carlyle Group L.P. $3.21 billion 0.68 $894.40 million $1.31 18.32
Financial Engines $458.22 million 5.06 $84.14 million $0.64 57.34

The Carlyle Group L.P. has higher revenue and earnings than Financial Engines. The Carlyle Group L.P. 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

The Carlyle Group L.P. pays an annual dividend of $1.68 per share and has a dividend yield of 7.0%. Financial Engines pays an annual dividend of $0.28 per share and has a dividend yield of 0.8%. The Carlyle Group L.P. pays out 128.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Financial Engines pays out 43.8% of its earnings in the form of a dividend.

Risk & Volatility

The Carlyle Group L.P. has a beta of 1.84, suggesting that its stock price is 84% more volatile than the S&P 500. Comparatively, Financial Engines has a beta of 2.2, suggesting that its stock price is 120% more volatile than the S&P 500.

Summary

Financial Engines beats The Carlyle Group L.P. on 9 of the 16 factors compared between the two stocks.

The Carlyle Group L.P. Company Profile

The Carlyle Group L.P. is a diversified multi-product global alternative asset management firm. The Company operates in four segments: Corporate Private Equity (CPE), Real Assets, Global Market Strategies (GMS) and Investment Solutions. Corporate Private Equity advises its buyout and growth capital funds, which pursue various corporate investments of different sizes and growth potentials. As of December 31, 2016, the Real Assets segment advised its 26 active carry funds focused on real estate, infrastructure and energy and natural resources (including power). As of December 31, 2016, the Global Market Strategies segment advised a group of 57 active funds that pursue investment strategies, including leveraged loans and structured credit, energy mezzanine opportunities, middle market lending and distressed debt. Its Investment Solutions segment provides investment opportunities and resources for its investors and clients.

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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