Critical Review: Oaktree Capital Group (OAK) and Ameriprise Financial Services (AMP)

Oaktree Capital Group (NYSE: OAK) and Ameriprise Financial Services (NYSE:AMP) are both mid-cap investment management & fund operators – nec companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, analyst recommendations, profitability, dividends, institutional ownership, earnings and valuation.

Profitability

This table compares Oaktree Capital Group and Ameriprise Financial Services’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Oaktree Capital Group 19.04% 18.88% 4.51%
Ameriprise Financial Services 14.24% 29.75% 1.31%

Dividends

Oaktree Capital Group pays an annual dividend of $2.24 per share and has a dividend yield of 5.3%. Ameriprise Financial Services pays an annual dividend of $3.32 per share and has a dividend yield of 2.1%. Oaktree Capital Group pays out 51.5% of its earnings in the form of a dividend. Ameriprise Financial Services pays out 31.0% 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. Oaktree Capital Group has increased its dividend for 7 consecutive years. Oaktree Capital Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Oaktree Capital Group has a beta of 0.61, indicating that its stock price is 39% less volatile than the S&P 500. Comparatively, Ameriprise Financial Services has a beta of 1.92, indicating that its stock price is 92% more volatile than the S&P 500.

Insider and Institutional Ownership

22.0% of Oaktree Capital Group shares are held by institutional investors. Comparatively, 81.5% of Ameriprise Financial Services shares are held by institutional investors. 1.5% of Ameriprise Financial Services shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of recent recommendations and price targets for Oaktree Capital Group and Ameriprise Financial Services, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Oaktree Capital Group 0 5 1 0 2.17
Ameriprise Financial Services 0 4 4 0 2.50

Oaktree Capital Group presently has a consensus price target of $49.50, indicating a potential upside of 16.75%. Ameriprise Financial Services has a consensus price target of $152.60, indicating a potential downside of 3.59%. Given Oaktree Capital Group’s higher possible upside, equities analysts clearly believe Oaktree Capital Group is more favorable than Ameriprise Financial Services.

Valuation and Earnings

This table compares Oaktree Capital Group and Ameriprise Financial Services’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Oaktree Capital Group $1.13 billion 5.88 $194.70 million $4.35 9.75
Ameriprise Financial Services $11.70 billion 2.00 $1.31 billion $10.71 14.78

Ameriprise Financial Services has higher revenue and earnings than Oaktree Capital Group. Oaktree Capital Group is trading at a lower price-to-earnings ratio than Ameriprise Financial Services, indicating that it is currently the more affordable of the two stocks.

Summary

Ameriprise Financial Services beats Oaktree Capital Group on 11 of the 17 factors compared between the two stocks.

Oaktree Capital Group Company Profile

Oaktree Capital Group, LLC (Oaktree) is an investment manager specializing in alternative investments. The Company operates through investment management segment, which consists of the investment management services that the Company provides to its clients. The Company manages investments in a range of strategies within approximately six asset classes, which include corporate debt, convertible securities, distressed debt, control investing, real estate and listed equities. The Funds managed by Oaktree include commingled funds, separate accounts and collateralized loan obligation vehicles (CLOs). The commingled funds include open-end and closed-end limited partnerships in which it makes an investment and for which it serves as the general partner. CLOs are structured finance vehicles in which the Company typically makes an investment and for which it serves as collateral manager. Its clientele includes the United States pension plans and corporations and/or their pension funds.

Ameriprise Financial Services Company Profile

Ameriprise Financial, Inc. is a financial services company that offers financial solutions to individual and institutional clients. The Company operates in five segments: Advice & Wealth Management; Asset Management; Annuities; Protection, and Corporate & Other. The Company uses Ameriprise Financial as its enterprise brand, as well as the name of its advisor network and certain of its retail products and services. The retail products and services that use the Ameriprise Financial brand include those that it provides through its advisors (financial planning, investment advisory accounts and retail brokerage services) and products and services that the Company markets directly to consumers or through affinity groups (personal auto and home insurance). The Company uses its RiverSource brand for its annuity and protection products issued by the RiverSource Life companies, including its life and disability income insurance products.

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