Critical Survey: Affiliated Managers Group (AMG) versus State Street Corporation (STT)
Affiliated Managers Group (NYSE: AMG) and State Street Corporation (NYSE:STT) are both large-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, analyst recommendations, profitability, dividends, valuation, institutional ownership and earnings.
Volatility and Risk
Affiliated Managers Group has a beta of 1.66, meaning that its share price is 66% more volatile than the S&P 500. Comparatively, State Street Corporation has a beta of 1.31, meaning that its share price is 31% more volatile than the S&P 500.
Earnings and Valuation
This table compares Affiliated Managers Group and State Street Corporation’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Affiliated Managers Group||$2.21 billion||4.93||$842.60 million||$9.02||21.57|
|State Street Corporation||$10.63 billion||3.49||$2.02 billion||$5.40||18.39|
State Street Corporation has higher revenue and earnings than Affiliated Managers Group. State Street Corporation is trading at a lower price-to-earnings ratio than Affiliated Managers Group, indicating that it is currently the more affordable of the two stocks.
This is a summary of recent recommendations and price targets for Affiliated Managers Group and State Street Corporation, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Affiliated Managers Group||0||2||5||0||2.71|
|State Street Corporation||1||9||3||1||2.29|
Affiliated Managers Group presently has a consensus target price of $206.43, indicating a potential upside of 6.10%. State Street Corporation has a consensus target price of $94.08, indicating a potential downside of 5.25%. Given Affiliated Managers Group’s stronger consensus rating and higher probable upside, analysts clearly believe Affiliated Managers Group is more favorable than State Street Corporation.
Affiliated Managers Group pays an annual dividend of $0.80 per share and has a dividend yield of 0.4%. State Street Corporation pays an annual dividend of $1.68 per share and has a dividend yield of 1.7%. Affiliated Managers Group pays out 8.9% of its earnings in the form of a dividend. State Street Corporation pays out 31.1% 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. State Street Corporation has raised its dividend for 6 consecutive years. State Street Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Insider and Institutional Ownership
96.3% of Affiliated Managers Group shares are held by institutional investors. Comparatively, 87.4% of State Street Corporation shares are held by institutional investors. 1.4% of Affiliated Managers Group shares are held by insiders. Comparatively, 0.7% of State Street Corporation shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
This table compares Affiliated Managers Group and State Street Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Affiliated Managers Group||22.99%||17.45%||8.75%|
|State Street Corporation||19.97%||12.49%||0.95%|
Affiliated Managers Group beats State Street Corporation on 12 of the 18 factors compared between the two stocks.
About Affiliated Managers Group
Affiliated Managers Group, Inc. is an asset management company with equity investments in boutique investment management firms. The Company operates in three segments, which represent its principal distribution channels: Institutional, Mutual Fund and High Net Worth. The equity method investments in the Institutional distribution channel are made in relationships with public and private client entities, including foundations, endowments, sovereign wealth funds and retirement plans for corporations and municipalities. The equity method investments in the Mutual Fund distribution channel are made in advisory or sub-advisory relationships with active return-oriented mutual funds, Undertakings for Collective Investment in Transferable Securities and other retail products. The equity method investments in the High Net Worth distribution channel are made in relationships with high net worth and ultra-high net worth individuals, families, trusts, foundations, endowments and retirement plans.
About State Street Corporation
State Street Corporation is a financial holding company. The Company operates through two lines of business: Investment Servicing and Investment Management. The Company, through its subsidiary, State Street Bank and Trust Company (State Street Bank), provides a range of financial products and services to institutional investors across the world. Investment servicing line of business performs functions, such as providing institutional investors with clearing, settlement and payment services. The Company operates investment management line of business through State Street Global Advisors (SSGA). SSGA provides a range of investment management, investment research and investment advisory services to corporations, public funds and other investors. Its clients include mutual funds, collective investment funds and other investment pools, corporate and public retirement plans, insurance companies, foundations, endowments and investment managers.
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