Analyzing AllianceBernstein (AB) & Affiliated Managers Group (AMG)

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AllianceBernstein (NYSE:AB) and Affiliated Managers Group (NYSE:AMG) are both mid-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, risk, earnings, dividends, institutional ownership, profitability and valuation.

Valuation & Earnings

This table compares AllianceBernstein and Affiliated Managers Group’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
AllianceBernstein $3.37 billion 0.82 $242.39 million $2.67 10.86
Affiliated Managers Group $2.38 billion 1.91 $243.60 million $14.50 6.13

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

Profitability

This table compares AllianceBernstein and Affiliated Managers Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AllianceBernstein 7.01% 15.89% 15.88%
Affiliated Managers Group -4.77% 17.72% 8.92%

Volatility and Risk

AllianceBernstein has a beta of 1.21, indicating that its stock price is 21% more volatile than the S&P 500. Comparatively, Affiliated Managers Group has a beta of 1.49, indicating that its stock price is 49% more volatile than the S&P 500.

Institutional & Insider Ownership

18.2% of AllianceBernstein shares are held by institutional investors. Comparatively, 98.9% of Affiliated Managers Group shares are held by institutional investors. 2.7% of AllianceBernstein shares are held by insiders. Comparatively, 1.4% of Affiliated Managers Group shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

AllianceBernstein pays an annual dividend of $1.96 per share and has a dividend yield of 6.8%. Affiliated Managers Group pays an annual dividend of $1.28 per share and has a dividend yield of 1.4%. AllianceBernstein pays out 73.4% of its earnings in the form of a dividend. Affiliated Managers Group pays out 8.8% 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. AllianceBernstein has increased its dividend for 2 consecutive years. AllianceBernstein is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for AllianceBernstein and Affiliated Managers Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AllianceBernstein 0 0 1 0 3.00
Affiliated Managers Group 0 4 3 0 2.43

AllianceBernstein currently has a consensus price target of $34.00, suggesting a potential upside of 17.28%. Affiliated Managers Group has a consensus price target of $131.70, suggesting a potential upside of 48.11%. Given Affiliated Managers Group’s higher possible upside, analysts plainly believe Affiliated Managers Group is more favorable than AllianceBernstein.

Summary

Affiliated Managers Group beats AllianceBernstein on 9 of the 17 factors compared between the two stocks.

AllianceBernstein Company Profile

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.

Affiliated Managers Group Company Profile

Affiliated Managers Group, Inc., through its affiliates, operates as an asset management company providing investment management services to mutual funds, institutional clients, and high net worth individuals in the United States. It provides advisory or subadvisory services to mutual funds. These funds are distributed to retail and institutional clients directly and through intermediaries, including independent investment advisors, retirement plan sponsors, broker-dealers, major fund marketplaces, and bank trust departments. The company also offers investment products in various investment styles in the institutional distribution channel, including small, small/mid, mid, and large capitalization value and growth equity, and emerging markets. In addition, it offers quantitative, alternative, and fixed income products, and manages assets for foundations and endowments, defined benefit, and defined contribution plans for corporations and municipalities. Affiliated Managers Group provides investment management or customized investment counseling and fiduciary services. The company was formed as a corporation under the laws of Delaware in 1993. Affiliated Managers Group is based in Prides Crossing, Massachusetts.

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