Legg Mason (NYSE: LM) is one of 55 public companies in the “Investment Management & Fund Operators” industry, but how does it compare to its competitors? We will compare Legg Mason to similar companies based on the strength of its analyst recommendations, earnings, profitability, dividends, institutional ownership, valuation and risk.

Dividends

Legg Mason pays an annual dividend of $1.12 per share and has a dividend yield of 2.9%. Legg Mason pays out 46.5% of its earnings in the form of a dividend. As a group, “Investment Management & Fund Operators” companies pay a dividend yield of 2.6% and pay out 49.1% of their earnings in the form of a dividend. Legg Mason has increased its dividend for 7 consecutive years. Legg Mason is clearly a better dividend stock than its competitors, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of recent ratings and target prices for Legg Mason and its competitors, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Legg Mason 3 2 5 0 2.20
Legg Mason Competitors 280 1640 1765 57 2.43

Legg Mason presently has a consensus price target of $42.89, indicating a potential upside of 10.45%. As a group, “Investment Management & Fund Operators” companies have a potential upside of 7.55%. Given Legg Mason’s higher possible upside, analysts plainly believe Legg Mason is more favorable than its competitors.

Volatility and Risk

Legg Mason has a beta of 2.22, indicating that its share price is 122% more volatile than the S&P 500. Comparatively, Legg Mason’s competitors have a beta of 1.23, indicating that their average share price is 23% more volatile than the S&P 500.

Profitability

This table compares Legg Mason and its competitors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Legg Mason 8.21% 6.84% 3.35%
Legg Mason Competitors -45.52% 7.61% 4.99%

Valuation and Earnings

This table compares Legg Mason and its competitors gross revenue, earnings per share (EPS) and valuation.

Gross Revenue EBITDA Price/Earnings Ratio
Legg Mason $2.98 billion $572.31 million 16.11
Legg Mason Competitors $2.89 billion $931.92 million 7.48

Legg Mason has higher revenue, but lower earnings than its competitors. Legg Mason is trading at a higher price-to-earnings ratio than its competitors, indicating that it is currently more expensive than other companies in its industry.

Institutional and Insider Ownership

82.3% of Legg Mason shares are owned by institutional investors. Comparatively, 62.0% of shares of all “Investment Management & Fund Operators” companies are owned by institutional investors. 12.7% of Legg Mason shares are owned by insiders. Comparatively, 10.5% of shares of all “Investment Management & Fund Operators” companies are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Summary

Legg Mason beats its competitors on 10 of the 15 factors compared.

Legg Mason Company Profile

Legg Mason, Inc. is a holding company. The Company and its subsidiaries are principally engaged in providing asset management and related financial services to individuals, institutions, corporations and municipalities. The Company operates through Global Asset Management segment. Global Asset Management provides investment advisory services to institutional and individual clients and to the Company-sponsored investment funds. The Company, through its subsidiaries, provides investment management and related services to institutional and individual clients, Company-sponsored investment funds and retail separately managed account programs. It offers its products and services directly and through various financial intermediaries. It has operations principally in the United States and the United Kingdom and also has offices in Australia, Bahamas, Brazil, Canada, Chile, China, Dubai, France, Germany, Italy, Japan, Luxembourg, Poland, Singapore, Spain, Switzerland and Taiwan.

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