Manning & Napier (NYSE: MN) and Fifth Street Asset Management (OTCMKTS:FSAM) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, profitability, valuation, institutional ownership, dividends, risk and earnings.

Profitability

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

Net Margins Return on Equity Return on Assets
Manning & Napier 3.30% 30.20% 18.84%
Fifth Street Asset Management -20.92% -626.41% -2.71%

Volatility and Risk

Manning & Napier has a beta of 1.52, suggesting that its stock price is 52% more volatile than the S&P 500. Comparatively, Fifth Street Asset Management has a beta of 0.34, suggesting that its stock price is 66% less volatile than the S&P 500.

Dividends

Manning & Napier pays an annual dividend of $0.32 per share and has a dividend yield of 8.6%. Fifth Street Asset Management pays an annual dividend of $0.25 per share and has a dividend yield of 6.1%. Manning & Napier pays out 66.7% of its earnings in the form of a dividend. Fifth Street Asset Management pays out -178.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Earnings and Valuation

This table compares Manning & Napier and Fifth Street Asset Management’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Manning & Napier $248.94 million 0.22 $9.27 million $0.48 7.71
Fifth Street Asset Management $82.55 million 2.52 -$1.53 million ($0.14) -29.14

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

Institutional and Insider Ownership

51.6% of Manning & Napier shares are held by institutional investors. Comparatively, 8.6% of Fifth Street Asset Management shares are held by institutional investors. 2.5% of Manning & Napier shares are held by company insiders. Comparatively, 85.4% of Fifth Street Asset Management shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current recommendations for Manning & Napier and Fifth Street Asset Management, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Manning & Napier 0 2 0 0 2.00
Fifth Street Asset Management 0 0 0 0 N/A

Manning & Napier presently has a consensus price target of $4.00, suggesting a potential upside of 8.11%. Given Manning & Napier’s higher probable upside, research analysts plainly believe Manning & Napier is more favorable than Fifth Street Asset Management.

Summary

Manning & Napier beats Fifth Street Asset Management on 10 of the 14 factors compared between the two stocks.

About Manning & Napier

Manning & Napier, Inc. is an independent investment management company. The Company operates through investment management industry segment. It provides a range of investment solutions through separately managed accounts, mutual funds and collective investment trust funds, as well as a range of consultative services. It offers equity, fixed income and alternative strategies, as well as a range of blended asset portfolios, such as life cycle funds. It serves a client base of high net worth individuals and institutions, including 401(k) plans, pension plans, Taft-Hartley plans (Taft-Hartley), endowments and foundations. It offers its investment management capabilities through direct sales to high net worth individuals and institutions, as well as through third-party intermediaries, platforms and institutional investment consultants. Its investment management offerings include approximately 40 separate account composites, and over 60 mutual funds and collective investment trusts.

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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