Fifth Street Asset Management (NASDAQ: FSAM) and Virtus Investment Partners (NASDAQ:VRTS) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, earnings, dividends, profitability, risk and institutional ownership.
Fifth Street Asset Management pays an annual dividend of $0.25 per share and has a dividend yield of 6.1%. Virtus Investment Partners pays an annual dividend of $1.80 per share and has a dividend yield of 1.6%. Fifth Street Asset Management pays out -192.3% of its earnings in the form of a dividend. Virtus Investment Partners pays out 35.2% 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. Fifth Street Asset Management is clearly the better dividend stock, given its higher yield and lower payout ratio.
Institutional & Insider Ownership
8.6% of Fifth Street Asset Management shares are held by institutional investors. Comparatively, 95.6% of Virtus Investment Partners shares are held by institutional investors. 86.0% of Fifth Street Asset Management shares are held by company insiders. Comparatively, 4.0% of Virtus Investment Partners shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Volatility & Risk
Fifth Street Asset Management has a beta of 0.35, meaning that its share price is 65% less volatile than the S&P 500. Comparatively, Virtus Investment Partners has a beta of 1.86, meaning that its share price is 86% more volatile than the S&P 500.
This table compares Fifth Street Asset Management and Virtus Investment Partners’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Fifth Street Asset Management||-0.63%||-399.09%||11.43%|
|Virtus Investment Partners||11.64%||13.33%||4.01%|
Earnings and Valuation
This table compares Fifth Street Asset Management and Virtus Investment Partners’ gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|Fifth Street Asset Management||$82.55 million||2.47||-$1.53 million||($0.13)||-31.38|
|Virtus Investment Partners||$322.55 million||2.59||$48.50 million||$5.12||22.58|
Virtus Investment Partners has higher revenue and earnings than Fifth Street Asset Management. Fifth Street Asset Management is trading at a lower price-to-earnings ratio than Virtus Investment Partners, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of current ratings and recommmendations for Fifth Street Asset Management and Virtus Investment Partners, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Fifth Street Asset Management||0||1||0||0||2.00|
|Virtus Investment Partners||0||5||0||0||2.00|
Fifth Street Asset Management presently has a consensus target price of $4.00, suggesting a potential downside of 1.96%. Virtus Investment Partners has a consensus target price of $130.00, suggesting a potential upside of 12.46%. Given Virtus Investment Partners’ higher possible upside, analysts clearly believe Virtus Investment Partners is more favorable than Fifth Street Asset Management.
Virtus Investment Partners beats Fifth Street Asset Management on 10 of the 14 factors compared between the two stocks.
About Fifth Street Asset Management
Fifth Street Asset Management Inc. is an alternative asset manager. The Company provides asset management services to its investment funds (the Fifth Street Funds or the funds), which consist of Fifth Street Finance Corp. (FSC) and Fifth Street Senior Floating Rate Corp. (FSFR), both publicly-traded business development companies (together, the BDCs). Its segment provides asset management services to the Fifth Street Funds. The Company conducts all of its operations through its subsidiaries, Fifth Street Management LLC (FSM), Fifth Street CLO Management LLC (CLO Management) and FSCO GP LLC (FSCO GP). The funds, managed by the Company, provide financing solutions to small and mid-sized companies across their capital structures, mainly in connection with investments by private equity sponsors. It provides credit solutions across the capital structure, including one-stop financing, unitranche debt, senior secured debt, mezzanine debt, equity co-investments and venture debt financing.
About Virtus Investment Partners
Virtus Investment Partners, Inc. (Virtus) is a provider of investment management and related services to individuals and institutions. The Company provides its products in various forms and through multiple distribution channels. Its retail products include open-end mutual funds, closed-end funds, exchange traded funds, variable insurance funds, undertakings for collective investments in transferable securities (UCITS) and separately managed accounts. Its open-end mutual funds are distributed through intermediaries. Its closed-end funds trade on the New York Stock Exchange. Its variable insurance funds are available as investment options in variable annuities and life insurance products distributed by life insurance companies. Separately managed accounts consists of intermediary programs, sponsored and distributed by unaffiliated brokerage firms, and private client accounts, which are offered to the high net-worth clients of its affiliated managers.
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