Contrasting Federated Investors (NYSE:FII) & WisdomTree Investments (WETF)

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

Profitability



This table compares WisdomTree Investments and Federated Investors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
WisdomTree Investments 13.33% 15.41% 12.78%
Federated Investors 18.91% 33.93% 18.36%

Dividends

WisdomTree Investments pays an annual dividend of $0.32 per share and has a dividend yield of 2.8%. Federated Investors pays an annual dividend of $1.00 per share and has a dividend yield of 3.3%. WisdomTree Investments pays out 145.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Federated Investors pays out 48.1% of its earnings in the form of a dividend. Federated Investors is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of recent ratings and price targets for WisdomTree Investments and Federated Investors, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
WisdomTree Investments 3 1 5 0 2.22
Federated Investors 2 5 0 0 1.71

WisdomTree Investments presently has a consensus target price of $10.88, indicating a potential downside of 5.93%. Federated Investors has a consensus target price of $27.29, indicating a potential downside of 11.15%. Given WisdomTree Investments’ stronger consensus rating and higher probable upside, equities research analysts plainly believe WisdomTree Investments is more favorable than Federated Investors.

Volatility & Risk

WisdomTree Investments has a beta of 3.15, meaning that its share price is 215% more volatile than the S&P 500. Comparatively, Federated Investors has a beta of 1.45, meaning that its share price is 45% more volatile than the S&P 500.

Insider and Institutional Ownership

92.5% of WisdomTree Investments shares are owned by institutional investors. Comparatively, 82.9% of Federated Investors shares are owned by institutional investors. 16.1% of WisdomTree Investments shares are owned by insiders. Comparatively, 7.1% of Federated Investors shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares WisdomTree Investments and Federated Investors’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
WisdomTree Investments $212.91 million 7.31 $55.10 million $0.22 52.55
Federated Investors $1.13 billion 2.76 $345.66 million $2.08 14.76

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

About WisdomTree Investments

WisdomTree Investments, Inc. is an asset management company that focuses on exchange-traded funds (ETFs). The Company’s family of ETFs includes funds that track its own indexes, funds that track third party indexes and actively managed funds. It operates as an exchange traded products sponsor and asset manager providing investment advisory services in the United States, Europe, Canada and Japan. These activities are reported in its U.S. Business segment that comprises its the United States business and Japan sales office, which primarily engages in selling its United States listed ETFs to Japanese institutions, and International Business segment, that comprises its European business and Canadian business. Its United States listed products include International Hedged Equity ETFs, Equity ETFs, Fixed Income ETFs, Currency ETFs, Alternative Strategy ETFs and Commodity ETFs. Its portfolio of Non-the United States listed products include WisdomTree UCITS ETFs, Boost ETPs and Canadian ETFs.

About Federated Investors

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.

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