Legg Mason (NYSE: LM) and Janus Capital Group (NYSE:JNS) are both mid-cap financials companies, but which is the superior business? We will contrast the two companies based on the strength of their profitability, valuation, earnings, analyst recommendations, risk, institutional ownership and dividends.

Dividends

Legg Mason pays an annual dividend of $1.12 per share and has a dividend yield of 2.6%. Janus Capital Group pays an annual dividend of $0.44 per share and has a dividend yield of 3.1%. Legg Mason pays out 43.8% of its earnings in the form of a dividend. Janus Capital Group pays out 57.9% 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. Legg Mason has increased its dividend for 7 consecutive years and Janus Capital Group has increased its dividend for 8 consecutive years. Janus Capital Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

82.5% of Legg Mason shares are owned by institutional investors. Comparatively, 90.2% of Janus Capital Group shares are owned by institutional investors. 12.7% of Legg Mason shares are owned by company insiders. Comparatively, 2.1% of Janus Capital Group shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Legg Mason and Janus Capital Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Legg Mason 2 4 3 0 2.11
Janus Capital Group 1 0 0 0 1.00

Legg Mason currently has a consensus target price of $43.44, indicating a potential downside of 0.68%. Janus Capital Group has a consensus target price of $13.00, indicating a potential downside of 8.26%. Given Legg Mason’s stronger consensus rating and higher probable upside, research analysts clearly believe Legg Mason is more favorable than Janus Capital Group.

Valuation and Earnings

This table compares Legg Mason and Janus Capital Group’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Legg Mason $2.89 billion 1.39 $227.25 million $2.56 17.09
Janus Capital Group N/A N/A N/A $0.76 18.64

Legg Mason has higher revenue and earnings than Janus Capital Group. Legg Mason is trading at a lower price-to-earnings ratio than Janus Capital Group, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Legg Mason and Janus Capital Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Legg Mason 8.46% 7.16% 3.49%
Janus Capital Group 12.54% 7.26% 4.48%

Legg Mason Company Profile

Legg Mason, Inc. is a holding company. The Company and its subsidiaries are principally engaged in providing asset management and related financial services to individuals, institutions, corporations and municipalities. The Company operates through Global Asset Management segment. Global Asset Management provides investment advisory services to institutional and individual clients and to the Company-sponsored investment funds. The Company, through its subsidiaries, provides investment management and related services to institutional and individual clients, Company-sponsored investment funds and retail separately managed account programs. It offers its products and services directly and through various financial intermediaries. It has operations principally in the United States and the United Kingdom and also has offices in Australia, Bahamas, Brazil, Canada, Chile, China, Dubai, France, Germany, Italy, Japan, Luxembourg, Poland, Singapore, Spain, Switzerland and Taiwan.

Janus Capital Group Company Profile

Janus Capital Group Inc. provides investment management, administration, distribution and related services to financial advisors, individuals and institutional clients through mutual funds, separate accounts, other pooled investment vehicles, exchange-traded products (ETPs) and subadvised relationships (collectively referred to as investment products) in both domestic and international markets. The Company operates through investment management business segment. The Company provides investment management solutions across a range of disciplines, including fundamental the United States and global equities (growth and value), mathematical equities, fixed income and alternatives. As of December 31, 2016, the Company’s investment products were distributed through three primary channels: intermediary, institutional and self-directed. Each distribution channel focuses on specific investor groups and the requirements of each group.

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