Analyzing T. Rowe Price Group (NASDAQ:TROW) and Hennessy Advisors (NASDAQ:HNNA)

T. Rowe Price Group (NASDAQ:TROW) and Hennessy Advisors (NASDAQ:HNNA) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, risk, profitability, earnings and valuation.

Valuation and Earnings

This table compares T. Rowe Price Group and Hennessy Advisors”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
T. Rowe Price Group	$7.21 billion	3.19	$2.10 billion	$9.18	11.47
Hennessy Advisors	$35.54 million	2.34	$9.96 million	$1.26	8.38

T. Rowe Price Group has higher revenue and earnings than Hennessy Advisors. Hennessy Advisors is trading at a lower price-to-earnings ratio than T. Rowe Price Group, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

T. Rowe Price Group has a beta of 1.52, suggesting that its share price is 52% more volatile than the S&P 500. Comparatively, Hennessy Advisors has a beta of 0.64, suggesting that its share price is 36% less volatile than the S&P 500.

Insider and Institutional Ownership

73.4% of T. Rowe Price Group shares are held by institutional investors. Comparatively, 10.3% of Hennessy Advisors shares are held by institutional investors. 1.6% of T. Rowe Price Group shares are held by company insiders. Comparatively, 36.0% of Hennessy Advisors shares are held 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.

Dividends

T. Rowe Price Group pays an annual dividend of $5.08 per share and has a dividend yield of 4.8%. Hennessy Advisors pays an annual dividend of $0.55 per share and has a dividend yield of 5.2%. T. Rowe Price Group pays out 55.3% of its earnings in the form of a dividend. Hennessy Advisors pays out 43.7% 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. T. Rowe Price Group has raised its dividend for 39 consecutive years. Hennessy Advisors is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares T. Rowe Price Group and Hennessy Advisors’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
T. Rowe Price Group	28.89%	19.95%	15.09%
Hennessy Advisors	28.03%	10.40%	6.35%

Analyst Recommendations

This is a breakdown of recent ratings and price targets for T. Rowe Price Group and Hennessy Advisors, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
T. Rowe Price Group	4	11	0	0	1.73
Hennessy Advisors	0	1	0	0	2.00

T. Rowe Price Group currently has a consensus price target of $107.31, indicating a potential upside of 1.90%. Given T. Rowe Price Group’s higher possible upside, equities analysts clearly believe T. Rowe Price Group is more favorable than Hennessy Advisors.

Summary

T. Rowe Price Group beats Hennessy Advisors on 12 of the 16 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; New York, New York; Philadelphia, Pennsylvania; 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, Shanghai, China; Germany, Madrid, Spain, Milan, Italy, Stockholm, Sweden, Melbourne, Australia, Amsterdam, Netherlands and Washington, DC.

About Hennessy Advisors

Hennessy Advisors, Inc. is an employee owned investment manager. It provides its services to Hennessy Funds and investment companies. The firm launches and manages equity, fixed income, and balanced mutual funds. It invests in the public equity and fixed income markets across the globe. The firm primarily invests in growth stocks of companies. It conducts in-house research to make its investments. Hennessy Advisors, Inc. was founded in 1989 and is based in Novato, California with additional offices in Boston, Massachusetts and Chapel Hill, North Carolina.