Artisan Partners Asset Management (NYSE: APAM) and Federated Investors (NYSE:FII) are both mid-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their valuation, dividends, institutional ownership, analyst recommendations, risk, earnings and profitability.

Profitability

This table compares Artisan Partners Asset Management and Federated Investors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Artisan Partners Asset Management 12.58% 95.09% 12.21%
Federated Investors 19.32% 34.54% 18.68%

Dividends

Artisan Partners Asset Management pays an annual dividend of $2.40 per share and has a dividend yield of 6.6%. Federated Investors pays an annual dividend of $1.00 per share and has a dividend yield of 3.3%. Artisan Partners Asset Management pays out 129.7% 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 pays out 47.6% of its earnings in the form of a dividend.

Analyst Recommendations

This is a summary of recent ratings and price targets for Artisan Partners Asset Management and Federated Investors, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Artisan Partners Asset Management 1 3 2 0 2.17
Federated Investors 2 6 0 0 1.75

Artisan Partners Asset Management presently has a consensus price target of $30.92, indicating a potential downside of 15.53%. Federated Investors has a consensus price target of $28.00, indicating a potential downside of 8.77%. Given Federated Investors’ higher probable upside, analysts plainly believe Federated Investors is more favorable than Artisan Partners Asset Management.

Volatility and Risk

Artisan Partners Asset Management has a beta of 1.77, suggesting that its share price is 77% more volatile than the S&P 500. Comparatively, Federated Investors has a beta of 1.56, suggesting that its share price is 56% more volatile than the S&P 500.

Insider & Institutional Ownership

64.8% of Artisan Partners Asset Management shares are held by institutional investors. Comparatively, 83.8% of Federated Investors shares are held by institutional investors. 30.0% of Artisan Partners Asset Management shares are held by insiders. Comparatively, 7.1% of Federated Investors shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Artisan Partners Asset Management and Federated Investors’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Artisan Partners Asset Management $720.90 million 3.84 $73.02 million $1.85 19.78
Federated Investors $1.14 billion 2.71 $208.91 million $2.10 14.61

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

Artisan Partners Asset Management Company Profile

Artisan Partners Asset Management Inc. is an investment management company. The Company provides a range of the United States, non-United States and global investment strategies, each of which is managed by one of its investment teams. The Company provides investment management services to separate accounts, mutual funds and other pooled investment vehicles. The Company offers its investment management services primarily to institutions and through intermediaries that operate with institutional-like decision-making processes and have long-term investment horizons. The Company provides clients with multiple equity investment strategies spanning market capitalization segments and investing styles in both the United States and non-United States markets. The Company also offers one fixed income strategy, the Artisan High Income strategy. Each strategy is managed by one of the investment teams.

Federated Investors Company Profile

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.

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