Financial Comparison: Federated Investors (FII) and The Carlyle Group (CG)

Federated Investors (NYSE: FII) and The Carlyle Group (NASDAQ:CG) are both mid-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their risk, analyst recommendations, institutional ownership, valuation, dividends, earnings and profitability.

Dividends

Federated Investors pays an annual dividend of $1.00 per share and has a dividend yield of 2.9%. The Carlyle Group pays an annual dividend of $2.24 per share and has a dividend yield of 10.8%. Federated Investors pays out 47.6% of its earnings in the form of a dividend. The Carlyle Group pays out 127.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Risk and Volatility

Federated Investors has a beta of 1.57, meaning that its stock price is 57% more volatile than the S&P 500. Comparatively, The Carlyle Group has a beta of 1.79, meaning that its stock price is 79% more volatile than the S&P 500.

Valuation & Earnings

This table compares Federated Investors and The Carlyle Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Federated Investors $1.14 billion 3.03 $208.91 million $2.10 16.35
The Carlyle Group $2.27 billion 0.89 $6.40 million $1.76 11.76

Federated Investors has higher earnings, but lower revenue than The Carlyle Group. The Carlyle Group is trading at a lower price-to-earnings ratio than Federated Investors, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Federated Investors and The Carlyle Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Federated Investors 19.32% 34.54% 18.68%
The Carlyle Group 5.43% 43.32% 7.82%

Insider and Institutional Ownership

85.6% of Federated Investors shares are owned by institutional investors. Comparatively, 38.1% of The Carlyle Group shares are owned by institutional investors. 7.1% of Federated Investors shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent ratings for Federated Investors and The Carlyle Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Federated Investors 2 6 0 0 1.75
The Carlyle Group 0 3 6 0 2.67

Federated Investors presently has a consensus target price of $28.00, indicating a potential downside of 18.44%. The Carlyle Group has a consensus target price of $24.63, indicating a potential upside of 18.96%. Given The Carlyle Group’s stronger consensus rating and higher probable upside, analysts clearly believe The Carlyle Group is more favorable than Federated Investors.

Summary

Federated Investors beats The Carlyle Group on 9 of the 16 factors compared between the two stocks.

Federated Investors Company Profile

Federated Investors, Inc. (Federated) is a provider of investment management products and related financial services. Federated operates through investment management business segment. It is engaged in sponsoring, marketing and providing investment-related services to various investment products, including mutual funds and Separate Accounts, which include separately managed accounts, institutional accounts, sub-advised funds and other managed products. It operates in one segment, the investment management business. As of December 31, 2016, Federated provided investment advisory services to 124 sponsored investment companies and other funds (Federated Funds). It markets these funds to banks, brokers and dealers and other financial intermediaries using them to meet the needs of their customers and clients, including retail investors, corporations and retirement plans. The Company offers a range of products and strategies, including money market, equity and fixed-income investments.

The Carlyle Group Company Profile

The Carlyle Group L.P. is a diversified multi-product global alternative asset management firm. The Company operates in four segments: Corporate Private Equity (CPE), Real Assets, Global Market Strategies (GMS) and Investment Solutions. Corporate Private Equity advises its buyout and growth capital funds, which pursue various corporate investments of different sizes and growth potentials. As of December 31, 2016, the Real Assets segment advised its 26 active carry funds focused on real estate, infrastructure and energy and natural resources (including power). As of December 31, 2016, the Global Market Strategies segment advised a group of 57 active funds that pursue investment strategies, including leveraged loans and structured credit, energy mezzanine opportunities, middle market lending and distressed debt. Its Investment Solutions segment provides investment opportunities and resources for its investors and clients.

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