Bank Of New York Mellon (NYSE: BK) and Gamco Investors (NYSE:GBL) are both finance companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, institutional ownership, dividends, analyst recommendations, valuation, profitability and earnings.
Bank Of New York Mellon pays an annual dividend of $0.96 per share and has a dividend yield of 1.8%. 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 out 28.1% of its earnings in the form of a dividend. Gamco Investors pays out 2.5% 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. Bank Of New York Mellon has increased its dividend for 4 consecutive years and Gamco Investors has increased its dividend for 5 consecutive years.
Valuation and Earnings
This table compares Bank Of New York Mellon and Gamco Investors’ top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Bank Of New York Mellon||$15.67 billion||3.54||$3.55 billion||$3.42||15.85|
|Gamco Investors||$353.00 million||2.40||$117.12 million||$3.20||9.07|
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.
Institutional & Insider Ownership
83.0% of Bank Of New York Mellon shares are owned by institutional investors. Comparatively, 25.7% of Gamco Investors shares are owned by institutional investors. 3.6% of Bank Of New York Mellon shares are owned by insiders. Comparatively, 79.0% of Gamco Investors shares are owned 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.
This is a breakdown of recent ratings and target prices for Bank Of New York Mellon and Gamco Investors, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Bank Of New York Mellon||2||9||4||1||2.25|
Bank Of New York Mellon currently has a consensus price target of $54.88, indicating a potential upside of 1.25%. Given Bank Of New York Mellon’s higher probable upside, analysts clearly believe Bank Of New York Mellon is more favorable than Gamco Investors.
Volatility & Risk
Bank Of New York Mellon has a beta of 1.22, indicating that its stock price is 22% more volatile than the S&P 500. Comparatively, Gamco Investors has a beta of 1.04, indicating that its stock price is 4% more volatile than the S&P 500.
This table compares Bank Of New York Mellon and Gamco Investors’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Bank Of New York Mellon||23.14%||10.51%||1.11%|
Bank Of New York Mellon beats Gamco Investors on 12 of the 17 factors compared between the two stocks.
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.
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.
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