Critical Contrast: The Blackstone Group L.P. (BX) versus Ares Management L.P. (ARES)

Ares Management L.P. (NYSE: ARES) and The Blackstone Group L.P. (NYSE:BX) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, profitability, earnings, risk, analyst recommendations, institutional ownership and dividends.

Earnings and Valuation

This table compares Ares Management L.P. and The Blackstone Group L.P.’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Ares Management L.P. $1.20 billion 1.29 $111.80 million $0.56 33.57
The Blackstone Group L.P. $5.13 billion 3.95 $1.04 billion $2.31 13.91

The Blackstone Group L.P. has higher revenue and earnings than Ares Management L.P.. The Blackstone Group L.P. is trading at a lower price-to-earnings ratio than Ares Management L.P., indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

15.1% of Ares Management L.P. shares are held by institutional investors. Comparatively, 45.5% of The Blackstone Group L.P. shares are held by institutional investors. 1.0% of The Blackstone Group L.P. shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Ares Management L.P. and The Blackstone Group L.P.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ares Management L.P. 4.98% 39.54% 6.11%
The Blackstone Group L.P. 22.88% 19.71% 8.71%

Analyst Recommendations

This is a breakdown of current ratings and price targets for Ares Management L.P. and The Blackstone Group L.P., as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ares Management L.P. 0 1 7 0 2.88
The Blackstone Group L.P. 0 1 8 0 2.89

Ares Management L.P. currently has a consensus price target of $21.00, indicating a potential upside of 11.70%. The Blackstone Group L.P. has a consensus price target of $38.56, indicating a potential upside of 20.00%. Given The Blackstone Group L.P.’s stronger consensus rating and higher possible upside, analysts plainly believe The Blackstone Group L.P. is more favorable than Ares Management L.P..

Dividends

Ares Management L.P. pays an annual dividend of $1.24 per share and has a dividend yield of 6.6%. The Blackstone Group L.P. pays an annual dividend of $1.76 per share and has a dividend yield of 5.5%. Ares Management L.P. pays out 221.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. The Blackstone Group L.P. pays out 76.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. The Blackstone Group L.P. has increased its dividend for 4 consecutive years.

Volatility and Risk

Ares Management L.P. has a beta of 1.23, meaning that its stock price is 23% more volatile than the S&P 500. Comparatively, The Blackstone Group L.P. has a beta of 1.39, meaning that its stock price is 39% more volatile than the S&P 500.

Summary

The Blackstone Group L.P. beats Ares Management L.P. on 15 of the 17 factors compared between the two stocks.

About Ares Management L.P.

Ares Management, L.P. is an alternative asset manager. The Company offers its investors a range of investment strategies. It operates through three segments: Credit Group, Private Equity Group and Real Estate Group. The Credit Group segment manages credit strategies across the non-investment grade credit universe in the United States and Europe. It offers a range of credit strategies across the liquid and illiquid spectrum, including syndicated loans, high yield bonds, credit opportunities, structured credit investments and the United States and European direct lending. The Credit Group provides solutions for traditional fixed income investors. The Private Equity Group segment categorizes its investment strategies as corporate private equity, the United States power and energy infrastructure and special situations. The Real Estate Group segment manages public and private equity and debt strategies. The Real Estate Group manages both a value-add strategy and an opportunistic strategy.

About The Blackstone Group L.P.

The Blackstone Group L.P. is a global alternative asset manager. The Company’s alternative asset management businesses include investment vehicles focused on private equity, non-investment grade credit, secondary private equity funds of funds and multi-asset class strategies. It operates through four segments: Private Equity, Real Estate, Hedge Fund Solutions and Credit. The Private Equity segment includes its corporate private equity business, which consists of its corporate private equity funds, Blackstone Capital Partners (BCP) funds, its sector-focused corporate private equity funds, including its energy-focused funds, Blackstone Energy Partners (BEP) funds and its core private equity fund. The Blackstone Real Estate Partners funds target a range of opportunistic real estate and real estate related investments. The Hedge Fund Solutions segment consists of Blackstone Alternative Asset Management (BAAM). The Credit segment consists principally of GSO Capital Partners LP (GSO).

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