Brookfield Asset Management (NYSE: BAM) and Arlington Asset Investment Corp (NYSE:AI) are both finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, earnings, valuation, dividends, institutional ownership, profitability and risk.

Volatility & Risk

Brookfield Asset Management has a beta of 1.03, indicating that its stock price is 3% more volatile than the S&P 500. Comparatively, Arlington Asset Investment Corp has a beta of 1.13, indicating that its stock price is 13% more volatile than the S&P 500.

Profitability

This table compares Brookfield Asset Management and Arlington Asset Investment Corp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Brookfield Asset Management 4.87% 2.10% 0.84%
Arlington Asset Investment Corp -33.84% -10.44% -0.93%

Analyst Recommendations

This is a summary of recent ratings and price targets for Brookfield Asset Management and Arlington Asset Investment Corp, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Brookfield Asset Management 0 1 7 0 2.88
Arlington Asset Investment Corp 0 2 2 0 2.50

Brookfield Asset Management presently has a consensus price target of $43.56, suggesting a potential upside of 10.79%. Arlington Asset Investment Corp has a consensus price target of $14.94, suggesting a potential upside of 14.64%. Given Arlington Asset Investment Corp’s higher possible upside, analysts clearly believe Arlington Asset Investment Corp is more favorable than Brookfield Asset Management.

Dividends

Brookfield Asset Management pays an annual dividend of $0.56 per share and has a dividend yield of 1.4%. Arlington Asset Investment Corp pays an annual dividend of $2.20 per share and has a dividend yield of 16.9%. Brookfield Asset Management pays out 43.8% of its earnings in the form of a dividend. Arlington Asset Investment Corp pays out -146.7% 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. Arlington Asset Investment Corp has increased its dividend for 5 consecutive years. Arlington Asset Investment Corp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Brookfield Asset Management and Arlington Asset Investment Corp’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Brookfield Asset Management $30.02 billion 1.26 $8.47 billion $1.28 30.72
Arlington Asset Investment Corp $45.40 million 7.45 -$38.93 million ($1.50) -8.69

Brookfield Asset Management has higher revenue and earnings than Arlington Asset Investment Corp. Arlington Asset Investment Corp is trading at a lower price-to-earnings ratio than Brookfield Asset Management, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

53.8% of Brookfield Asset Management shares are held by institutional investors. Comparatively, 38.6% of Arlington Asset Investment Corp shares are held by institutional investors. 2.7% of Arlington Asset Investment Corp shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

Brookfield Asset Management beats Arlington Asset Investment Corp on 9 of the 16 factors compared between the two stocks.

About Brookfield Asset Management

Brookfield Asset Management Inc. is an alternative asset manager. The Company operates in eight segments. The Asset Management segment manages its listed partnerships, private funds and public markets on behalf of its clients. The Property segment includes the ownership, operation and development of office, retail and other properties. The Renewable power segment operates and develops hydroelectric, wind power and other generating facilities. The Infrastructure segment includes the ownership, operation and development of utilities and agricultural operations, among others. The Residential development segment includes homebuilding, condominium development and land development. The Service activities segment includes construction management and contracting services and property services. The Private equity segment includes the investments and operations overseen by its private equity group. The Corporate activities segment includes the allocation of capital to its operating platforms.

About Arlington Asset Investment Corp

Arlington Asset Investment Corp. is an investment company. The Company focuses on acquiring and holding a levered portfolio of residential mortgage-backed securities (MBS), consisting of agency MBS and private-label MBS. Agency MBS include residential mortgage pass-through certificates for which the principal and interest payments are guaranteed by a United States Government agency or government-sponsored enterprise (GSE), such as the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). Private-label MBS, or non-agency MBS, include residential MBS that are not guaranteed by a GSE or the United States Government. The Company funds its investments primarily through short-term financing arrangements. The Company purchases agency MBS either in initial offerings or in the secondary market through broker-dealers or similar entities. It may invest in agency MBS collateralized by adjustable-rate mortgage loans (ARMs) or hybrid ARMs.

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