Critical Review: OM Asset Management PLC (OMAM) versus Ares Management L.P. (ARES)

OM Asset Management PLC (NYSE: OMAM) and Ares Management L.P. (NYSE:ARES) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, valuation, dividends, profitability, risk, analyst recommendations and institutional ownership.

Insider and Institutional Ownership

47.9% of OM Asset Management PLC shares are held by institutional investors. Comparatively, 14.4% of Ares Management L.P. shares are held by institutional investors. 1.5% of OM Asset Management PLC shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares OM Asset Management PLC and Ares Management L.P.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
OM Asset Management PLC 12.12% 95.51% 12.52%
Ares Management L.P. 5.86% 40.94% 7.01%

Earnings and Valuation

This table compares OM Asset Management PLC and Ares Management L.P.’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
OM Asset Management PLC $772.40 million 1.92 $173.80 million $0.79 16.89
Ares Management L.P. $1.47 billion 2.58 $260.09 million $0.73 24.25

Ares Management L.P. has higher revenue and earnings than OM Asset Management PLC. OM Asset Management PLC is trading at a lower price-to-earnings ratio than Ares Management L.P., indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings and target prices for OM Asset Management PLC and Ares Management L.P., as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
OM Asset Management PLC 0 0 6 0 3.00
Ares Management L.P. 0 1 6 0 2.86

OM Asset Management PLC currently has a consensus price target of $17.88, indicating a potential upside of 34.00%. Ares Management L.P. has a consensus price target of $21.83, indicating a potential upside of 23.35%. Given OM Asset Management PLC’s stronger consensus rating and higher possible upside, equities analysts plainly believe OM Asset Management PLC is more favorable than Ares Management L.P..

Risk and Volatility

OM Asset Management PLC has a beta of 1.71, indicating that its share price is 71% more volatile than the S&P 500. Comparatively, Ares Management L.P. has a beta of 1.25, indicating that its share price is 25% more volatile than the S&P 500.

Dividends

OM Asset Management PLC pays an annual dividend of $0.36 per share and has a dividend yield of 2.7%. Ares Management L.P. pays an annual dividend of $1.24 per share and has a dividend yield of 7.0%. OM Asset Management PLC pays out 45.6% of its earnings in the form of a dividend. Ares Management L.P. pays out 169.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

OM Asset Management PLC beats Ares Management L.P. on 10 of the 15 factors compared between the two stocks.

About OM Asset Management PLC

OM Asset Management plc is a global, diversified, multi-boutique asset management company. As of December 31, 2016, the Company operated its business through its eight Affiliates, each of which operated autonomously and employed its own investment processes. Its Affiliates include Acadian Asset Management LLC; Barrow, Hanley, Mewhinney & Strauss, LLC; Campbell Global, LLC; Copper Rock Capital Partners LLC; Heitman LLC; Investment Counselors of Maryland, LLC; Landmark Partners, LLC, and Thompson, Siegel & Walmsley LLC. It works with boutique asset managers, and the Company leverages the resources within its organization to engage with its Affiliates and provide them with capabilities unavailable to specialist asset management firms. The Company works with its Affiliates to identify and execute upon opportunities for their businesses in areas, such as business line expansion and product development, as well as activities required for the operation of investment boutiques.

About Ares Management L.P.

Ares Management, L.P. is an alternative asset manager. The Company offers its investors a range of investment strategies. It operates through three segments: Credit Group, Private Equity Group and Real Estate Group. The Credit Group segment manages credit strategies across the non-investment grade credit universe in the United States and Europe. It offers a range of credit strategies across the liquid and illiquid spectrum, including syndicated loans, high yield bonds, credit opportunities, structured credit investments and the United States and European direct lending. The Credit Group provides solutions for traditional fixed income investors. The Private Equity Group segment categorizes its investment strategies as corporate private equity, the United States power and energy infrastructure and special situations. The Real Estate Group segment manages public and private equity and debt strategies. The Real Estate Group manages both a value-add strategy and an opportunistic strategy.

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