Head to Head Review: Federated Investors (FII) and Alcentra Capital (ABDC)

Federated Investors (NYSE:FII) and Alcentra Capital (NASDAQ:ABDC) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, profitability, analyst recommendations, dividends, valuation, earnings and risk.

Analyst Ratings

This is a summary of recent ratings for Federated Investors and Alcentra Capital, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Federated Investors 1 5 0 0 1.83
Alcentra Capital 0 3 0 0 2.00



Federated Investors currently has a consensus target price of $28.42, suggesting a potential upside of 12.05%. Alcentra Capital has a consensus target price of $7.00, suggesting a potential upside of 11.29%. Given Federated Investors’ higher possible upside, equities research analysts clearly believe Federated Investors is more favorable than Alcentra Capital.

Profitability

This table compares Federated Investors and Alcentra Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Federated Investors 26.25% 30.19% 18.27%
Alcentra Capital -29.76% 9.29% 5.02%

Risk and Volatility

Federated Investors has a beta of 1.11, suggesting that its stock price is 11% more volatile than the S&P 500. Comparatively, Alcentra Capital has a beta of 0.59, suggesting that its stock price is 41% less volatile than the S&P 500.

Dividends

Federated Investors pays an annual dividend of $1.08 per share and has a dividend yield of 4.3%. Alcentra Capital pays an annual dividend of $0.72 per share and has a dividend yield of 11.4%. Federated Investors pays out 49.5% of its earnings in the form of a dividend. Alcentra Capital pays out 54.5% 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.

Insider & Institutional Ownership

83.2% of Federated Investors shares are held by institutional investors. Comparatively, 31.6% of Alcentra Capital shares are held by institutional investors. 5.3% of Federated Investors shares are held by insiders. Comparatively, 0.6% of Alcentra Capital shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Federated Investors and Alcentra Capital’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 $1.10 billion 2.31 $291.34 million $2.18 11.63
Alcentra Capital $33.35 million 2.55 -$19.10 million $1.32 4.77

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

Summary

Federated Investors beats Alcentra Capital on 12 of the 15 factors compared between the two stocks.

Federated Investors Company Profile

Federated Investors, Inc. is a publicly owned asset management holding company. Through its subsidiaries, the firm provides its services to individuals, including high net worth individuals, banking or thrift institutions, investment companies, pension and profit sharing plans, pooled investment vehicles, charitable organizations, state or municipal government entities, and registered investment advisors. Through its subsidiaries, it manages separate client-focused equity, fixed income, balanced and money market mutual funds along with separate client-focused equity, fixed income, money market, and balanced portfolios. Through its subsidiaries, the firm invests in the public equity and fixed income markets across the globe. It invests in growth and value stocks of small-cap, mid-cap, and large-cap companies. The firm makes its fixed income investments in ultra-short, short-term, and intermediate-term mortgage-backed, U.S. Government, U.S. corporate, high yield, and municipal securities. It employs both fundamental and quantitative analysis to make its equity investments. Federated Investors, Inc. was founded in 1955 and is based in Pittsburgh, Pennsylvania with additional offices in New York City and London, United Kingdom.

Alcentra Capital Company Profile

Alcentra Capital Corporation is a business development company specializing in investments in lower middle-market companies. The fund seeks to invest in healthcare, business services, defense, government services, telecom and technology, media, infrastructure maintenance and logistics, and oil and gas services sector. It focuses on investment opportunities headquartered in the United States. The fund seeks to invest $5 million to $15 million per transaction in companies with EBITDA between $5 million to $15 million and revenues of between $10 million and $100 million. It invests in the form of subordinated debt and, to a lesser extent, senior debt and minority equity investments.

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