Legg Mason (NYSE: BSIG) and Brightsphere Investment Group (NYSE:BSIG) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, analyst recommendations, earnings, risk, institutional ownership, profitability and dividends.

Profitability

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

Net Margins Return on Equity Return on Assets
Legg Mason 11.87% 8.12% 3.90%
Brightsphere Investment Group 3.06% 138.53% 13.71%

Insider & Institutional Ownership

86.6% of Legg Mason shares are owned by institutional investors. Comparatively, 1.3% of Brightsphere Investment Group shares are owned by institutional investors. 4.3% of Legg Mason shares are owned by company insiders. Comparatively, 0.6% of Brightsphere Investment Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and recommmendations for Legg Mason and Brightsphere Investment Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Legg Mason 2 4 4 0 2.20
Brightsphere Investment Group 0 1 5 0 2.83

Legg Mason presently has a consensus target price of $44.40, suggesting a potential upside of 45.57%. Brightsphere Investment Group has a consensus target price of $19.67, suggesting a potential upside of 55.34%. Given Brightsphere Investment Group’s stronger consensus rating and higher possible upside, analysts clearly believe Brightsphere Investment Group is more favorable than Legg Mason.

Dividends

Legg Mason pays an annual dividend of $1.36 per share and has a dividend yield of 4.5%. Brightsphere Investment Group pays an annual dividend of $0.27 per share and has a dividend yield of 2.1%. Legg Mason pays out 36.6% of its earnings in the form of a dividend. Brightsphere Investment Group pays out 16.7% 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 8 consecutive years. Legg Mason is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares Legg Mason and Brightsphere Investment Group’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Legg Mason $3.14 billion 0.83 $285.07 million $3.72 8.20
Brightsphere Investment Group $887.40 million 1.57 $4.20 million $1.62 7.81

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

Summary

Legg Mason beats Brightsphere Investment Group on 8 of the 15 factors compared between the two stocks.

Legg Mason Company Profile

Legg Mason, Inc. is a publicly owned asset management holding company. Through its subsidiaries, the firm provides investment management and related services to company-sponsored mutual funds and other investment vehicles including pension funds, foundations, endowments, sovereign wealth funds, insurance companies, private banks, family offices, individuals, as well as to global, institutional, and retail clients. It launches and manages equity, fixed income, and multi-asset customized portfolios through its subsidiaries. The firm also launches and manages mutual funds and exchange traded funds for its clients through its subsidiaries. It invests in private and public equity, fixed income, and multi asset markets across the globe through its subsidiaries. Through its subsidiaries, the firm also invests in alternative markets. It also employs a combination of fundamental and quantitative research to make its investments through its subsidiaries. Legg Mason, Inc. was founded in 1899 and is based in Baltimore, Maryland.

Brightsphere Investment Group Company Profile

BrightSphere Investment Group plc is a publically owned asset management holding company. The firm provides its services to individuals and institutions. It manages separate client focused portfolios through its subsidiaries. The firm also launches equity mutual funds for its clients. It invests in public equity, fixed income, and alternative investment markets through its subsidiaries. The firm was founded in 1980 is based Boston, Massachusetts. It was formally known as OM Asset Management plc. BrightSphere Investment Group plc operates as a former subsidiary of Old Mutual Global Investors.

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