Comparing Bank Of New York Mellon (BK) & Gamco Investors (GBL)

Gamco Investors (NYSE: GBL) and Bank Of New York Mellon (NYSE:BK) are both financials companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, analyst recommendations, earnings, institutional ownership, risk, profitability and valuation.

Profitability

This table compares Gamco Investors and Bank Of New York Mellon’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Gamco Investors 26.81% -63.12% 45.24%
Bank Of New York Mellon 23.14% 10.51% 1.11%

Institutional and Insider Ownership

25.7% of Gamco Investors shares are owned by institutional investors. Comparatively, 82.9% of Bank Of New York Mellon shares are owned by institutional investors. 80.0% of Gamco Investors shares are owned by company insiders. Comparatively, 3.6% of Bank Of New York Mellon shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Risk and Volatility

Gamco Investors has a beta of 1.06, suggesting that its share price is 6% more volatile than the S&P 500. Comparatively, Bank Of New York Mellon has a beta of 1.22, suggesting that its share price is 22% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Gamco Investors and Bank Of New York Mellon, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Gamco Investors 0 0 0 0 N/A
Bank Of New York Mellon 2 7 6 0 2.27

Bank Of New York Mellon has a consensus target price of $56.33, indicating a potential downside of 2.59%. Given Bank Of New York Mellon’s higher possible upside, analysts clearly believe Bank Of New York Mellon is more favorable than Gamco Investors.

Dividends

Gamco Investors pays an annual dividend of $0.08 per share and has a dividend yield of 0.3%. Bank Of New York Mellon pays an annual dividend of $0.96 per share and has a dividend yield of 1.7%. Gamco Investors pays out 2.5% of its earnings in the form of a dividend. Bank Of New York Mellon pays out 28.2% 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. Gamco Investors has increased its dividend for 5 consecutive years and Bank Of New York Mellon has increased its dividend for 6 consecutive years. Bank Of New York Mellon is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Gamco Investors and Bank Of New York Mellon’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Gamco Investors $353.00 million 2.47 $117.12 million $3.18 9.40
Bank Of New York Mellon $15.67 billion 3.78 $3.55 billion $3.40 17.01

Bank Of New York Mellon has higher revenue and earnings than Gamco Investors. Gamco Investors is trading at a lower price-to-earnings ratio than Bank Of New York Mellon, indicating that it is currently the more affordable of the two stocks.

Summary

Bank Of New York Mellon beats Gamco Investors on 12 of the 16 factors compared between the two stocks.

Gamco Investors Company Profile

GAMCO Investors, Inc. is a holding company. The Company is a provider of investment advisory services to open and closed-end funds, institutional and private wealth management investors principally in the United States. The Company operates through the investment advisory and asset management business segment. It manages assets on a discretionary basis and invests in securities through various investment styles. Its assets under management are organized into three groups: Institutional and Private Wealth Management; Open and Closed-End Funds, and the GAMCO International SICAV (SICAV). The Company provides advisory services to a range of investors, including corporate retirement plans, foundations, endowments and private wealth clients, and also serves as sub-advisor to third-party investment funds, including registered investment companies. As of December 31, 2016, it had provided advisory services to 21 open-end funds, 15 closed-end funds and one exchange traded managed fund.

Bank Of New York Mellon Company Profile

The Bank of New York Mellon Corporation is an investments company. The Company operates businesses through two segments: Investment Management and Investment Services. The Company also has an Other segment, which includes the leasing portfolio, corporate treasury activities (including its investment securities portfolio), derivatives and other trading, corporate and bank-owned life insurance and renewable energy investments, and business exits. As of December 31, 2016, the Company had $29.9 trillion in assets under custody and/or administration and $1.6 trillion in assets under management. The Company’s Investment Management boutiques offer a range of actively managed equity, fixed income, alternative and liability-driven investments, along with passive products and cash management. The Company offers asset servicing, clearing services, issuer services and treasury services to its clients.

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