Comparing Bain Capital Specialty Finance (NYSE:BCSF) and Affiliated Managers Group (NYSE:AMG)

Affiliated Managers Group (NYSE:AMG) and Bain Capital Specialty Finance (NYSE:BCSF) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their institutional ownership, profitability, dividends, valuation, earnings, risk and analyst recommendations.

Profitability

This table compares Affiliated Managers Group and Bain Capital Specialty Finance’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Affiliated Managers Group	37.72%	21.94%	9.72%
Bain Capital Specialty Finance	24.22%	10.40%	4.33%

Volatility and Risk

Affiliated Managers Group has a beta of 1.1, meaning that its share price is 10% more volatile than the S&P 500. Comparatively, Bain Capital Specialty Finance has a beta of 0.58, meaning that its share price is 42% less volatile than the S&P 500.

Institutional & Insider Ownership

95.3% of Affiliated Managers Group shares are held by institutional investors. 2.9% of Affiliated Managers Group shares are held by insiders. Comparatively, 0.6% of Bain Capital Specialty Finance shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Affiliated Managers Group and Bain Capital Specialty Finance”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Affiliated Managers Group	$2.07 billion	4.59	$716.60 million	$28.87	12.76
Bain Capital Specialty Finance	$273.24 million	2.64	$98.76 million	$0.99	11.25

Affiliated Managers Group has higher revenue and earnings than Bain Capital Specialty Finance. Bain Capital Specialty Finance 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.

Analyst Recommendations

This is a breakdown of current recommendations for Affiliated Managers Group and Bain Capital Specialty Finance, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Affiliated Managers Group	0	0	7	1	3.12
Bain Capital Specialty Finance	1	3	0	0	1.75

Affiliated Managers Group currently has a consensus price target of $370.86, suggesting a potential upside of 0.70%. Bain Capital Specialty Finance has a consensus price target of $12.60, suggesting a potential upside of 13.16%. Given Bain Capital Specialty Finance’s higher probable upside, analysts plainly believe Bain Capital Specialty Finance is more favorable than Affiliated Managers Group.

Dividends

Affiliated Managers Group pays an annual dividend of $0.04 per share and has a dividend yield of 0.0%. Bain Capital Specialty Finance pays an annual dividend of $1.68 per share and has a dividend yield of 15.1%. Affiliated Managers Group pays out 0.1% of its earnings in the form of a dividend. Bain Capital Specialty Finance pays out 169.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Bain Capital Specialty Finance has raised its dividend for 4 consecutive years. Bain Capital Specialty Finance is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Affiliated Managers Group beats Bain Capital Specialty Finance on 15 of the 18 factors compared between the two stocks.

About Affiliated Managers Group

Affiliated Managers Group, Inc., through its affiliates, operates as an investment management company providing investment management services to mutual funds, institutional clients,retails and high net worth individuals in the United States. It provides advisory or sub-advisory services to mutual funds. These funds are distributed to retail, high net worth and institutional clients directly and through intermediaries, including independent investment advisors, retirement plan sponsors, broker-dealers, major fund marketplaces, and bank trust departments. The company also offers investment products in various investment styles in the institutional distribution channel, including small, small/mid, mid, and large capitalization value and growth equity, and emerging markets. In addition, it offers quantitative, alternative, and fixed income products, and manages assets for foundations and endowments, defined benefit, and defined contribution plans for corporations and municipalities. Affiliated Managers Group provides investment management or customized investment counseling and fiduciary services. Affiliated Managers Group, Inc. was formed in 1993 and is based in West Palm Beach, Florida with additional offices in Prides Crossing, Massachusetts; Stamford, Connecticut; London, United Kingdom; Dubai, United Arab Emirates; Sydney, Australia; Hong Kong; Tokyo, Japan, Zurich, Switzerland and Delaware.

About Bain Capital Specialty Finance

Bain Capital Specialty Finance, Inc. is business development company specializing in direct loans to middle-market companies. The fund seeks to invest in senior investments with a first or second lien on collateral, senior first lien, stretch senior, senior second lien, unitranche, mezzanine debt, junior securities, other junior investments, and secondary purchases of assets or portfolios that primarily consist of middle-market corporate debt. It typically invests in companies with EBITDA between $10 million and $150 million.