Northern Trust Corporation (NASDAQ: NTRS) and Fortress Investment Group (NYSE:FIG) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, dividends, risk, institutional ownership, valuation, profitability and analyst recommendations.

Earnings and Valuation

This table compares Northern Trust Corporation and Fortress Investment Group’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Northern Trust Corporation $5.09 billion 4.00 $1.01 billion $4.40 20.24
Fortress Investment Group $950.66 million 1.84 $273.52 million $0.44 18.09

Northern Trust Corporation has higher revenue and earnings than Fortress Investment Group. Fortress Investment Group is trading at a lower price-to-earnings ratio than Northern Trust Corporation, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

82.9% of Northern Trust Corporation shares are owned by institutional investors. Comparatively, 43.9% of Fortress Investment Group shares are owned by institutional investors. 1.3% of Northern Trust Corporation shares are owned by company insiders. Comparatively, 45.2% of Fortress Investment Group shares are owned 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.

Analyst Recommendations

This is a summary of recent ratings and price targets for Northern Trust Corporation and Fortress Investment Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Northern Trust Corporation 1 6 3 1 2.36
Fortress Investment Group 0 4 0 0 2.00

Northern Trust Corporation presently has a consensus price target of $94.64, suggesting a potential upside of 6.26%. Fortress Investment Group has a consensus price target of $6.00, suggesting a potential downside of 24.62%. Given Northern Trust Corporation’s stronger consensus rating and higher probable upside, equities analysts plainly believe Northern Trust Corporation is more favorable than Fortress Investment Group.

Risk and Volatility

Northern Trust Corporation has a beta of 0.92, suggesting that its share price is 8% less volatile than the S&P 500. Comparatively, Fortress Investment Group has a beta of 1.95, suggesting that its share price is 95% more volatile than the S&P 500.

Profitability

This table compares Northern Trust Corporation and Fortress Investment Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Northern Trust Corporation 20.21% 12.08% 0.88%
Fortress Investment Group 10.61% 38.79% 15.58%

Dividends

Northern Trust Corporation pays an annual dividend of $1.52 per share and has a dividend yield of 1.7%. Fortress Investment Group pays an annual dividend of $0.36 per share and has a dividend yield of 4.5%. Northern Trust Corporation pays out 34.5% of its earnings in the form of a dividend. Fortress Investment Group pays out 81.8% 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

Northern Trust Corporation beats Fortress Investment Group on 12 of the 17 factors compared between the two stocks.

About Northern Trust Corporation

Northern Trust Corporation is a financial holding company. The Company provides asset servicing, fund administration, asset management, fiduciary and banking solutions for corporations, institutions, families and individuals across the world. Its segments include Corporate & Institutional Services (C&IS), Wealth Management, and Treasury and Other. The C&IS segment is a provider of asset servicing and related services to corporate and public retirement funds, foundations, endowments, fund managers, insurance companies, sovereign wealth funds and other institutional investors around the globe. The Wealth Management segment provides trust, investment management, custody and philanthropic services; financial consulting; guardianship and estate administration; family business consulting; family financial education; brokerage services, and private and business banking. It conducts its business through various subsidiaries.

About Fortress Investment Group

Fortress Investment Group LLC (Fortress) is an investment management firm. The Company operates through segments, including private equity funds, permanent capital vehicles, credit hedge funds, credit PE funds, liquid hedge funds and Logan Circle. Its business is to sponsor the formation of, and provide investment management services for, various investment funds, permanent capital vehicles and related managed accounts (the Fortress Funds). Fortress’s sources of income from the Fortress Funds are management fees, incentive income and investment income on its investments in the funds. As of December 31, 2016, the Company’s private equity business manages approximately $13.5 billion of assets under management (AUM); credit funds business manages approximately $18.1 billion of AUM; liquid hedge funds business manages over $4.6 billion of AUM, and Logan Circle business manages approximately $33.4 billion of AUM.

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