Northern Trust Corporation (NASDAQ: NTRS) and American Capital (NASDAQ:ACAS) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, risk, profitabiliy, earnings and valuation.
This table compares Northern Trust Corporation and American Capital’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Northern Trust Corporation||20.20%||11.96%||0.87%|
Northern Trust Corporation pays an annual dividend of $1.52 per share and has a dividend yield of 1.6%. American Capital does not pay a dividend. Northern Trust Corporation pays out 34.8% of its earnings in the form of a dividend.
Volatility and Risk
Northern Trust Corporation has a beta of 0.97, suggesting that its share price is 3% less volatile than the S&P 500. Comparatively, American Capital has a beta of 1, suggesting that its share price has a similar volatility profile to the S&P 500.
Earnings & Valuation
This table compares Northern Trust Corporation and American Capital’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Northern Trust Corporation||$5.09 billion||4.30||$1.00 billion||$4.37||21.81|
Northern Trust Corporation has higher revenue and earnings than American Capital. American Capital is trading at a lower price-to-earnings ratio than Northern Trust Corporation, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of recent ratings and price targets for Northern Trust Corporation and American Capital, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Northern Trust Corporation||0||5||3||1||2.56|
Northern Trust Corporation currently has a consensus price target of $91.11, indicating a potential downside of 4.40%. American Capital has a consensus price target of $17.50, indicating a potential downside of 2.72%. Given American Capital’s higher possible upside, analysts clearly believe American Capital is more favorable than Northern Trust Corporation.
Insider and Institutional Ownership
82.9% of Northern Trust Corporation shares are held by institutional investors. Comparatively, 65.7% of American Capital shares are held by institutional investors. 1.3% of Northern Trust Corporation shares are held by company insiders. Comparatively, 9.2% of American Capital shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
About Northern Trust Corporation
Northern Trust Corporation is a financial holding company. The Company provides asset servicing, fund administration, asset management, fiduciary and banking solutions for corporations, institutions, families and individuals across the world. Its segments include Corporate & Institutional Services (C&IS), Wealth Management, and Treasury and Other. The C&IS segment is a provider of asset servicing and related services to corporate and public retirement funds, foundations, endowments, fund managers, insurance companies, sovereign wealth funds and other institutional investors around the globe. The Wealth Management segment provides trust, investment management, custody and philanthropic services; financial consulting; guardianship and estate administration; family business consulting; family financial education; brokerage services, and private and business banking. It conducts its business through various subsidiaries.
About American Capital
Acas LLC., formerly American Capital, Ltd. (American Capital) is a global asset manager and private equity firm. American Capital, both directly and through its asset management business, originates, underwrites and manages investments in middle market private equity, leveraged finance, real estate, energy and structured products. It primarily invests in senior and mezzanine debt and equity in buyouts of private companies sponsored by the Company (American Capital One Stop Buyouts) or sponsored by other private equity funds and provide capital directly to early-stage and mature private and small public companies (Sponsor Finance and Other Investments). It also invests in first and second lien floating rate loans to the United States-based companies (Senior Floating Rate Loans or SFRL) and structured finance investments (Structured Products), including collateralized loan obligation (CLO) securities and commercial mortgages, and commercial mortgage backed securities (CMBS).
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