Eaton Vance Corporation (NYSE: EV) and Ares Management L.P. (NYSE:ARES) are both mid-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, analyst recommendations, profitabiliy, risk, earnings, dividends and institutional ownership.
This table compares Eaton Vance Corporation and Ares Management L.P.’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Eaton Vance Corporation||18.39%||36.63%||13.68%|
|Ares Management L.P.||5.86%||40.40%||7.20%|
Eaton Vance Corporation pays an annual dividend of $1.12 per share and has a dividend yield of 2.3%. Ares Management L.P. pays an annual dividend of $0.52 per share and has a dividend yield of 2.8%. Eaton Vance Corporation pays out 49.3% of its earnings in the form of a dividend. Ares Management L.P. pays out 71.2% 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. Ares Management L.P. has increased its dividend for 36 consecutive years. Ares Management L.P. is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Risk and Volatility
Eaton Vance Corporation has a beta of 1.84, suggesting that its share price is 84% more volatile than the S&P 500. Comparatively, Ares Management L.P. has a beta of 1.25, suggesting that its share price is 25% more volatile than the S&P 500.
Valuation and Earnings
This table compares Eaton Vance Corporation and Ares Management L.P.’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Eaton Vance Corporation||$1.42 billion||3.91||$461.96 million||$2.27||21.27|
|Ares Management L.P.||$1.30 billion||3.01||$241.00 million||$0.73||25.00|
Eaton Vance Corporation has higher revenue and earnings than Ares Management L.P.. Eaton Vance Corporation is trading at a lower price-to-earnings ratio than Ares Management L.P., indicating that it is currently the more affordable of the two stocks.
This is a breakdown of current recommendations for Eaton Vance Corporation and Ares Management L.P., as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Eaton Vance Corporation||1||4||1||0||2.00|
|Ares Management L.P.||0||2||6||0||2.75|
Eaton Vance Corporation presently has a consensus price target of $47.08, indicating a potential downside of 2.48%. Ares Management L.P. has a consensus price target of $20.86, indicating a potential upside of 14.29%. Given Ares Management L.P.’s stronger consensus rating and higher probable upside, analysts clearly believe Ares Management L.P. is more favorable than Eaton Vance Corporation.
Insider and Institutional Ownership
71.2% of Eaton Vance Corporation shares are held by institutional investors. Comparatively, 14.7% of Ares Management L.P. shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
Eaton Vance Corporation beats Ares Management L.P. on 9 of the 16 factors compared between the two stocks.
Eaton Vance Corporation Company Profile
Eaton Vance Corp. is engaged in the business of managing investment funds and providing investment management and advisory services to high-net-worth individuals and institutions. The Company operates as an investment advisor to funds and separate accounts. The Company, through its subsidiaries and other affiliates, manages active equity, income and alternative strategies across a range of investment styles and asset classes, including the United States and global equities, floating-rate bank loans, municipal bonds, global income, high-yield and investment grade bonds. Through its subsidiary, the Company also manages a range of engineered alpha strategies, including systematic equity, systematic alternatives and managed options strategies. The Company’s open-end fund lineup includes tax-managed equity funds, and non-tax-managed equity and multi-asset funds. The Company’s family of closed-end funds includes municipal bond, domestic and global equity, and bank loan.
Ares Management L.P. Company Profile
Ares Management, L.P. is an alternative asset manager. The Company offers its investors a range of investment strategies. It operates through three segments: Credit Group, Private Equity Group and Real Estate Group. The Credit Group segment manages credit strategies across the non-investment grade credit universe in the United States and Europe. It offers a range of credit strategies across the liquid and illiquid spectrum, including syndicated loans, high yield bonds, credit opportunities, structured credit investments and the United States and European direct lending. The Credit Group provides solutions for traditional fixed income investors. The Private Equity Group segment categorizes its investment strategies as corporate private equity, the United States power and energy infrastructure and special situations. The Real Estate Group segment manages public and private equity and debt strategies. The Real Estate Group manages both a value-add strategy and an opportunistic strategy.
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