OM Asset Management PLC (NYSE: OMAM) and Fifth Street Asset Management (NASDAQ:FSAM) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, profitability, analyst recommendations, earnings, risk, valuation and dividends.

Risk & Volatility

OM Asset Management PLC has a beta of 1.73, indicating that its stock price is 73% more volatile than the S&P 500. Comparatively, Fifth Street Asset Management has a beta of 0.33, indicating that its stock price is 67% less volatile than the S&P 500.

Institutional and Insider Ownership

66.0% of OM Asset Management PLC shares are held by institutional investors. Comparatively, 8.6% of Fifth Street Asset Management shares are held by institutional investors. 1.5% of OM Asset Management PLC shares are held by company insiders. Comparatively, 86.0% of Fifth Street Asset Management shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares OM Asset Management PLC and Fifth Street Asset Management’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 1.99 $173.80 million $0.79 17.70
Fifth Street Asset Management $71.87 million 0.88 $35.88 million ($0.14) -28.93

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

Dividends

OM Asset Management PLC pays an annual dividend of $0.36 per share and has a dividend yield of 2.6%. Fifth Street Asset Management pays an annual dividend of $0.35 per share and has a dividend yield of 8.6%. OM Asset Management PLC pays out 45.6% of its earnings in the form of a dividend. Fifth Street Asset Management pays out -250.0% 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. Fifth Street Asset Management is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of current recommendations and price targets for OM Asset Management PLC and Fifth Street Asset Management, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
OM Asset Management PLC 0 0 6 0 3.00
Fifth Street Asset Management 0 1 0 0 2.00

OM Asset Management PLC presently has a consensus target price of $17.88, suggesting a potential upside of 27.86%. Fifth Street Asset Management has a consensus target price of $4.00, suggesting a potential downside of 1.23%. Given OM Asset Management PLC’s stronger consensus rating and higher probable upside, analysts plainly believe OM Asset Management PLC is more favorable than Fifth Street Asset Management.

Profitability

This table compares OM Asset Management PLC and Fifth Street Asset Management’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%
Fifth Street Asset Management -0.63% -399.09% 11.43%

Summary

OM Asset Management PLC beats Fifth Street Asset Management on 12 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 Fifth Street Asset Management

Fifth Street Asset Management Inc. is an alternative asset manager. The Company provides asset management services to its investment funds (the Fifth Street Funds or the funds), which consist of Fifth Street Finance Corp. (FSC) and Fifth Street Senior Floating Rate Corp. (FSFR), both publicly-traded business development companies (together, the BDCs). Its segment provides asset management services to the Fifth Street Funds. The Company conducts all of its operations through its subsidiaries, Fifth Street Management LLC (FSM), Fifth Street CLO Management LLC (CLO Management) and FSCO GP LLC (FSCO GP). The funds, managed by the Company, provide financing solutions to small and mid-sized companies across their capital structures, mainly in connection with investments by private equity sponsors. It provides credit solutions across the capital structure, including one-stop financing, unitranche debt, senior secured debt, mezzanine debt, equity co-investments and venture debt financing.

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