AllianceBernstein (NYSE: AB) and Fifth Street Asset Management (OTCMKTS:FSAM) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, valuation, analyst recommendations, dividends, risk, institutional ownership and earnings.

Earnings & Valuation

This table compares AllianceBernstein and Fifth Street Asset Management’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
AllianceBernstein $3.03 billion 0.77 $216.58 million $2.12 11.79
Fifth Street Asset Management $82.55 million 2.47 -$1.53 million ($0.14) -28.57

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

Volatility & Risk

AllianceBernstein has a beta of 1.6, meaning that its stock price is 60% more volatile than the S&P 500. Comparatively, Fifth Street Asset Management has a beta of 0.35, meaning that its stock price is 65% less volatile than the S&P 500.

Profitability

This table compares AllianceBernstein and Fifth Street Asset Management’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AllianceBernstein 6.38% 13.72% 13.72%
Fifth Street Asset Management -20.92% -626.41% -2.71%

Dividends

AllianceBernstein pays an annual dividend of $2.04 per share and has a dividend yield of 8.2%. Fifth Street Asset Management pays an annual dividend of $0.25 per share and has a dividend yield of 6.3%. AllianceBernstein pays out 96.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Fifth Street Asset Management pays out -178.6% of its earnings in the form of a dividend.

Analyst Ratings

This is a breakdown of current recommendations and price targets for AllianceBernstein and Fifth Street Asset Management, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AllianceBernstein 0 1 4 0 2.80
Fifth Street Asset Management 0 0 0 0 N/A

AllianceBernstein currently has a consensus target price of $27.50, indicating a potential upside of 10.00%. Given AllianceBernstein’s higher possible upside, research analysts plainly believe AllianceBernstein is more favorable than Fifth Street Asset Management.

Insider & Institutional Ownership

20.9% of AllianceBernstein shares are owned by institutional investors. Comparatively, 8.8% of Fifth Street Asset Management shares are owned by institutional investors. 2.7% of AllianceBernstein shares are owned by company insiders. Comparatively, 85.4% of Fifth Street Asset Management shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

AllianceBernstein beats Fifth Street Asset Management on 12 of the 15 factors compared between the two stocks.

About AllianceBernstein

AllianceBernstein Holding L.P. is engaged in providing research, investment management and related services to a range of clients through its three buy-side distribution channels: Institutions, Retail and Private Wealth Management, and its sell-side business, Bernstein Research Services. The Company offers a range of investment services, including equity strategies, with global and regional portfolios across capitalization ranges and investment strategies, including value, growth and equities; traditional and unconstrained fixed income strategies, including taxable and tax-exempt strategies; passive management, including index and enhanced index strategies; alternative investments, including hedge funds, fund of funds and private equity, and multi-asset solutions and services, including dynamic asset allocation, customized target-date funds and target-risk funds. The Company’s services span various investment disciplines, including market capitalization, term and geographic locations.

About Fifth Street Asset Management

Fifth Street Asset Management Inc. is an alternative asset manager. The Company provides asset management services to its investment funds (the Fifth Street Funds or the funds), which consist of Fifth Street Finance Corp. (FSC) and Fifth Street Senior Floating Rate Corp. (FSFR), both publicly-traded business development companies (together, the BDCs). Its segment provides asset management services to the Fifth Street Funds. The Company conducts all of its operations through its subsidiaries, Fifth Street Management LLC (FSM), Fifth Street CLO Management LLC (CLO Management) and FSCO GP LLC (FSCO GP). The funds, managed by the Company, provide financing solutions to small and mid-sized companies across their capital structures, mainly in connection with investments by private equity sponsors. It provides credit solutions across the capital structure, including one-stop financing, unitranche debt, senior secured debt, mezzanine debt, equity co-investments and venture debt financing.

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