T. Rowe Price Group (NASDAQ:TROW) and Primus Guaranty (OTCMKTS:PRSG) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their dividends, analyst recommendations, earnings, profitability, valuation, institutional ownership and risk.

Volatility and Risk

T. Rowe Price Group has a beta of 1.21, meaning that its share price is 21% more volatile than the S&P 500. Comparatively, Primus Guaranty has a beta of -0.55, meaning that its share price is 155% less volatile than the S&P 500.

Insider & Institutional Ownership

71.6% of T. Rowe Price Group shares are owned by institutional investors. 3.1% of T. Rowe Price Group shares are owned by company insiders. Comparatively, 3.1% of Primus Guaranty shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and target prices for T. Rowe Price Group and Primus Guaranty, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
T. Rowe Price Group 1 6 2 0 2.11
Primus Guaranty 0 0 0 0 N/A

T. Rowe Price Group presently has a consensus target price of $108.25, indicating a potential upside of 16.05%. Given T. Rowe Price Group’s higher possible upside, analysts plainly believe T. Rowe Price Group is more favorable than Primus Guaranty.

Earnings and Valuation

This table compares T. Rowe Price Group and Primus Guaranty’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
T. Rowe Price Group $4.79 billion 4.68 $1.50 billion $5.43 17.18
Primus Guaranty N/A N/A N/A N/A N/A

T. Rowe Price Group has higher revenue and earnings than Primus Guaranty.

Dividends

T. Rowe Price Group pays an annual dividend of $2.80 per share and has a dividend yield of 3.0%. Primus Guaranty does not pay a dividend. T. Rowe Price Group pays out 51.6% of its earnings in the form of a dividend. T. Rowe Price Group has increased its dividend for 31 consecutive years.

Profitability

This table compares T. Rowe Price Group and Primus Guaranty’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
T. Rowe Price Group 33.98% 29.52% 22.91%
Primus Guaranty N/A N/A N/A

Summary

T. Rowe Price Group beats Primus Guaranty on 10 of the 11 factors compared between the two stocks.

About T. Rowe Price Group

T. Rowe Price Group, Inc. is a publicly owned investment manager. The firm provides its services to individuals, institutional investors, retirement plans, financial intermediaries, and institutions. It launches and manages equity and fixed income mutual funds. The firm invests in the public equity and fixed income markets across the globe. It employs fundamental and quantitative analysis with a bottom-up approach. The firm utilizes in-house and external research to make its investments. It employs socially responsible investing with a focus on environmental, social, and governance issues. It makes investment in late-stage venture capital transactions and usually invests between $3 million and $5 million. The firm was previously known as T. Rowe Group, Inc. and T. Rowe Price Associates, Inc. T. Rowe Price Group, Inc. was founded in 1937 and is based in Baltimore, Maryland, with additional offices in Colorado Springs, Colorado; Owings Mills, Maryland; San Francisco, California; Tampa, Florida; Toronto, Ontario; Hellerup, Denmark; Amsterdam, The Netherlands; Luxembourg, Grand Duchy of Luxembourg; Zurich, Switzerland; Dubai, United Arab Emirates; London, United Kingdom; Sydney, New South Wales; Hong Kong; Tokyo, Japan; Singapore; Frankfurt, Germany, Madrid, Spain, Milan, Italy, Stockholm, Sweden, Melbourne, Australia, and Amsterdam, Netherlands.

About Primus Guaranty

Primus Guaranty, Ltd., through its subsidiaries, provides credit swaps to financial institutions. It offers protection against the risk of default on primarily investment grade corporate reference entities. The company provides credit protection on a single specified reference entity, multiple reference entities, and asset-backed securities for dealers and banks. It also manages credit swap and cash investment portfolios of its affiliates, as well as provides management, consulting, and information technology services. The company was founded in 1998 and is based in Hamilton, Bermuda. As of September, 29 2014, Primus Guaranty, Ltd. is in Liquidation.

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