Contrasting T. Rowe Price Group (NASDAQ:TROW) and Eaton Vance Corporation (EV)

T. Rowe Price Group (NASDAQ: TROW) and Eaton Vance Corporation (NYSE:EV) are both mid-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, profitability, dividends, earnings, risk and institutional ownership.

Analyst Recommendations

This is a breakdown of current ratings for T. Rowe Price Group and Eaton Vance Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
T. Rowe Price Group 2 7 1 0 1.90
Eaton Vance Corporation 1 4 1 0 2.00

T. Rowe Price Group presently has a consensus price target of $79.13, indicating a potential downside of 3.86%. Eaton Vance Corporation has a consensus price target of $49.42, indicating a potential upside of 5.68%. Given Eaton Vance Corporation’s stronger consensus rating and higher probable upside, analysts plainly believe Eaton Vance Corporation is more favorable than T. Rowe Price Group.

Dividends

T. Rowe Price Group pays an annual dividend of $2.28 per share and has a dividend yield of 2.8%. Eaton Vance Corporation pays an annual dividend of $1.12 per share and has a dividend yield of 2.4%. T. Rowe Price Group pays out 39.2% of its earnings in the form of a dividend. Eaton Vance Corporation pays out 49.3% 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 increased its dividend for 30 consecutive years and Eaton Vance Corporation has increased its dividend for 36 consecutive years. T. Rowe Price Group is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares T. Rowe Price Group and Eaton Vance Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
T. Rowe Price Group 32.64% 24.38% 18.94%
Eaton Vance Corporation 18.39% 36.63% 13.68%

Institutional and Insider Ownership

72.1% of T. Rowe Price Group shares are held by institutional investors. Comparatively, 71.0% of Eaton Vance Corporation shares are held by institutional investors. 3.6% of T. Rowe Price Group shares are held by company 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.

Risk & Volatility

T. Rowe Price Group has a beta of 1.24, indicating that its share price is 24% more volatile than the S&P 500. Comparatively, Eaton Vance Corporation has a beta of 1.84, indicating that its share price is 84% more volatile than the S&P 500.

Valuation and Earnings

This table compares T. Rowe Price Group and Eaton Vance Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
T. Rowe Price Group $4.47 billion 4.43 $2.06 billion $5.82 14.14
Eaton Vance Corporation $1.42 billion 3.65 $461.96 million $2.27 20.60

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

Summary

T. Rowe Price Group beats Eaton Vance Corporation on 10 of the 16 factors compared between the two stocks.

T. Rowe Price Group Company Profile

T. Rowe Price Group, Inc. is a financial services holding company. The Company provides global investment management services through its subsidiaries to investors across the world. The Company provides an array of Company sponsored the United States mutual funds, other sponsored pooled investment vehicles, sub advisory services, separate account management, recordkeeping, and related services to individuals, advisors, institutions, financial intermediaries and retirement plan sponsors. The Company distributes its products in countries located within three geographical regions: North America, Europe Middle East and Africa (EMEA), and Asia Pacific (APAC). It also offers specialized advisory services, including management of stable value investment contracts and a distribution management service for the disposition of equity securities its clients receive from third-party venture capital investment pools. As of December 31, 2016, it serviced clients in 45 countries across the world.

Eaton Vance Corporation Company Profile

Eaton Vance Corp. is engaged in the business of managing investment funds and providing investment management and advisory services to high-net-worth individuals and institutions. The Company operates as an investment advisor to funds and separate accounts. The Company, through its subsidiaries and other affiliates, manages active equity, income and alternative strategies across a range of investment styles and asset classes, including the United States and global equities, floating-rate bank loans, municipal bonds, global income, high-yield and investment grade bonds. Through its subsidiary, the Company also manages a range of engineered alpha strategies, including systematic equity, systematic alternatives and managed options strategies. The Company’s open-end fund lineup includes tax-managed equity funds, and non-tax-managed equity and multi-asset funds. The Company’s family of closed-end funds includes municipal bond, domestic and global equity, and bank loan.

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