Contrasting Manning & Napier (NYSE:MN) & Federated Investors (FII)

Manning & Napier (NYSE: MN) and Federated Investors (NYSE:FII) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, risk, analyst recommendations, dividends, institutional ownership, valuation and profitability.

Analyst Ratings

This is a breakdown of recent recommendations for Manning & Napier and Federated Investors, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Manning & Napier 0 3 0 0 2.00
Federated Investors 2 4 0 0 1.67

Manning & Napier currently has a consensus target price of $6.00, indicating a potential upside of 79.10%. Federated Investors has a consensus target price of $23.50, indicating a potential downside of 12.12%. Given Manning & Napier’s stronger consensus rating and higher possible upside, equities analysts plainly believe Manning & Napier is more favorable than Federated Investors.

Volatility & Risk

Manning & Napier has a beta of 1.4, indicating that its share price is 40% more volatile than the S&P 500. Comparatively, Federated Investors has a beta of 1.42, indicating that its share price is 42% more volatile than the S&P 500.

Earnings and Valuation

This table compares Manning & Napier and Federated Investors’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Manning & Napier $229.41 million 0.22 $80.46 million $0.53 6.32
Federated Investors $1.13 billion 2.31 $345.66 million $2.08 12.86

Federated Investors has higher revenue and earnings than Manning & Napier. Manning & Napier is trading at a lower price-to-earnings ratio than Federated Investors, indicating that it is currently the more affordable of the two stocks.

Dividends

Manning & Napier pays an annual dividend of $0.32 per share and has a dividend yield of 9.6%. Federated Investors pays an annual dividend of $1.00 per share and has a dividend yield of 3.7%. Manning & Napier pays out 60.4% of its earnings in the form of a dividend. Federated Investors pays out 48.1% 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.

Profitability

This table compares Manning & Napier and Federated Investors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Manning & Napier 3.41% 34.28% 20.97%
Federated Investors 18.91% 33.93% 18.36%

Institutional and Insider Ownership

70.6% of Manning & Napier shares are held by institutional investors. Comparatively, 84.9% of Federated Investors shares are held by institutional investors. 2.5% of Manning & Napier shares are held by insiders. Comparatively, 7.1% of Federated Investors shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

Federated Investors beats Manning & Napier on 10 of the 15 factors compared between the two stocks.

About Manning & Napier

Manning & Napier, Inc. is an independent investment management company. The Company operates through investment management industry segment. It provides a range of investment solutions through separately managed accounts, mutual funds and collective investment trust funds, as well as a range of consultative services. It offers equity, fixed income and alternative strategies, as well as a range of blended asset portfolios, such as life cycle funds. It serves a client base of high net worth individuals and institutions, including 401(k) plans, pension plans, Taft-Hartley plans (Taft-Hartley), endowments and foundations. It offers its investment management capabilities through direct sales to high net worth individuals and institutions, as well as through third-party intermediaries, platforms and institutional investment consultants. Its investment management offerings include approximately 40 separate account composites, and over 60 mutual funds and collective investment trusts.

About Federated Investors

Federated Investors, Inc. (Federated) is a provider of investment management products and related financial services. Federated operates through investment management business segment. It is engaged in sponsoring, marketing and providing investment-related services to various investment products, including mutual funds and Separate Accounts, which include separately managed accounts, institutional accounts, sub-advised funds and other managed products. It operates in one segment, the investment management business. As of December 31, 2016, Federated provided investment advisory services to 124 sponsored investment companies and other funds (Federated Funds). It markets these funds to banks, brokers and dealers and other financial intermediaries using them to meet the needs of their customers and clients, including retail investors, corporations and retirement plans. The Company offers a range of products and strategies, including money market, equity and fixed-income investments.

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