Critical Review: Acadian Asset Management (NYSE:AAMI) and B. Riley Financial (NASDAQ:RILY)

Acadian Asset Management (NYSE:AAMI) and B. Riley Financial (NASDAQ:RILY) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, dividends, valuation, analyst recommendations, institutional ownership, risk and profitability.

Dividends

Acadian Asset Management pays an annual dividend of $0.04 per share and has a dividend yield of 0.1%. B. Riley Financial pays an annual dividend of $2.00 per share and has a dividend yield of 68.3%. Acadian Asset Management pays out 1.7% of its earnings in the form of a dividend. B. Riley Financial pays out -7.2% 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. B. Riley Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares Acadian Asset Management and B. Riley Financial”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Acadian Asset Management	$519.80 million	2.14	$85.00 million	$2.41	12.92
B. Riley Financial	$1.44 billion	0.06	-$99.91 million	($27.77)	-0.11

Acadian Asset Management has higher earnings, but lower revenue than B. Riley Financial. B. Riley Financial is trading at a lower price-to-earnings ratio than Acadian Asset Management, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Acadian Asset Management and B. Riley Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Acadian Asset Management	16.81%	1,000.27%	18.11%
B. Riley Financial	-48.04%	-236.88%	-11.40%

Insider and Institutional Ownership

98.7% of Acadian Asset Management shares are held by institutional investors. Comparatively, 50.2% of B. Riley Financial shares are held by institutional investors. 26.0% of Acadian Asset Management shares are held by insiders. Comparatively, 32.9% of B. Riley Financial shares are held by 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

Acadian Asset Management has a beta of 1.36, indicating that its share price is 36% more volatile than the S&P 500. Comparatively, B. Riley Financial has a beta of 1.46, indicating that its share price is 46% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations for Acadian Asset Management and B. Riley Financial, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Acadian Asset Management	0	3	0	0	2.00
B. Riley Financial	0	0	0	0	0.00

Acadian Asset Management currently has a consensus price target of $25.67, suggesting a potential downside of 17.58%. Given Acadian Asset Management’s stronger consensus rating and higher possible upside, research analysts clearly believe Acadian Asset Management is more favorable than B. Riley Financial.

Summary

Acadian Asset Management beats B. Riley Financial on 10 of the 15 factors compared between the two stocks.

About Acadian Asset Management

Acadian Asset Management Inc. is a publically owned asset management holding company. The firm provides its services to individuals and institutions. It manages separate client focused portfolios through its subsidiaries. The firm also launches equity mutual funds for its clients. It invests in public equity, fixed income, and alternative investment markets through its subsidiaries. The firm was founded in 1980 is based Boston, Massachusetts. It was formally known as BrightSphere Investment Group plc. BrightSphere Investment Group Inc. was formed in 1980 and is based in Boston, Massachusetts.

About B. Riley Financial

B. Riley Financial, Inc., through its subsidiaries, provides financial services to corporate, institutional, and high net worth clients in North America, Australia, the Asia Pacific, and Europe. The company operates through six segments: Capital Markets, Wealth Management, Financial Consulting, Auction and Liquidation, Communications, and Consumer. The Capital Markets segments offers investment banking, equity research, institutional sales and trading, securities lending, fund and asset management, direct lending, venture capital, proprietary trading, and investment services; merger and acquisition, restructuring advisory, and recapitalization services; public and private equity offerings; and debt financing solutions. This segment also trades in equity securities. The Wealth Management segment provides wealth management and tax services. The Financial Consulting segment offers bankruptcy restructuring and turnaround management, forensic accounting and litigation support, valuation and appraisal, and real estate services. The Auction and Liquidation Segment provides auction and liquidation services. The Communications segment offers dial-up, mobile broadband and digital subscriber line services under the NetZero and Juno brands; cloud communication services; VoIP cloud-based technology and communication devices and subscription services through magicJack; and mobile phone voice, text, and data services and devices through Marconi Wireless. The Consumer segment sells laptop and computer accessories. The company was formerly known as Great American Group, Inc. and changed its name to B. Riley Financial, Inc. in November 2014. B. Riley Financial, Inc. was founded in 1973 and is headquartered in Los Angeles, California.