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

Risk and Volatility

AllianceBernstein has a beta of 1.29, suggesting that its stock price is 29% more volatile than the S&P 500. Comparatively, Legg Mason has a beta of 1.87, suggesting that its stock price is 87% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and price targets for AllianceBernstein and Legg Mason, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AllianceBernstein 0 0 1 0 3.00
Legg Mason 2 4 4 0 2.20

AllianceBernstein currently has a consensus target price of $34.00, suggesting a potential upside of 11.66%. Legg Mason has a consensus target price of $44.40, suggesting a potential upside of 44.58%. Given Legg Mason’s higher probable upside, analysts clearly believe Legg Mason is more favorable than AllianceBernstein.

Earnings & Valuation

This table compares AllianceBernstein and Legg Mason’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
AllianceBernstein $3.30 billion 0.90 $207.42 million $2.30 13.24
Legg Mason $3.14 billion 0.84 $285.07 million $3.72 8.26

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

Dividends

AllianceBernstein pays an annual dividend of $2.48 per share and has a dividend yield of 8.1%. Legg Mason pays an annual dividend of $1.36 per share and has a dividend yield of 4.4%. AllianceBernstein pays out 107.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Legg Mason pays out 36.6% of its earnings in the form of a dividend. Legg Mason has increased its dividend for 8 consecutive years.

Insider and Institutional Ownership

20.3% of AllianceBernstein shares are owned by institutional investors. Comparatively, 86.6% of Legg Mason shares are owned by institutional investors. 2.7% of AllianceBernstein shares are owned by company insiders. Comparatively, 4.3% of Legg Mason shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
AllianceBernstein 6.94% 17.02% 17.01%
Legg Mason 11.87% 8.12% 3.90%

Summary

Legg Mason beats AllianceBernstein on 10 of the 17 factors compared between the two stocks.

About AllianceBernstein

AllianceBernstein Holding L.P. is publicly owned investment manager. The firm also provides research services to its clients. It provides its services to investment companies, pension and profit sharing plans, banks and thrift institutions, trusts, estates, government agencies, charitable organizations, individuals, corporations, and other business entities. The firm invests in public equity, fixed income, and alternative investment markets across the globe. It employs long/short strategy to make its investments. The firm conducts in-house research to make its investments. AllianceBernstein Holding L.P. was founded in 1987 and is based in New York, New York.

About Legg Mason

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.

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