Critical Review: UBS Group (UBS) & Brookfield Asset Management (BAM)

Brookfield Asset Management (NYSE: BAM) and UBS Group (NYSE:UBS) are both large-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, analyst recommendations, earnings, valuation, profitability, dividends and institutional ownership.

Earnings & Valuation

This table compares Brookfield Asset Management and UBS Group’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Brookfield Asset Management $24.41 billion 1.71 $1.65 billion $0.45 96.76
UBS Group $36.28 billion 1.95 $3.25 billion $1.08 17.03

UBS Group has higher revenue and earnings than Brookfield Asset Management. UBS Group is trading at a lower price-to-earnings ratio than Brookfield Asset Management, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Brookfield Asset Management has a beta of 1.04, indicating that its share price is 4% more volatile than the S&P 500. Comparatively, UBS Group has a beta of 1.24, indicating that its share price is 24% more volatile than the S&P 500.

Dividends

Brookfield Asset Management pays an annual dividend of $0.56 per share and has a dividend yield of 1.3%. UBS Group pays an annual dividend of $0.60 per share and has a dividend yield of 3.3%. Brookfield Asset Management pays out 124.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. UBS Group pays out 55.6% of its earnings in the form of a dividend. Brookfield Asset Management has increased its dividend for 5 consecutive years and UBS Group has increased its dividend for 4 consecutive years. UBS Group is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

54.4% of Brookfield Asset Management shares are held by institutional investors. Comparatively, 34.0% of UBS Group shares are held by institutional investors. 1.0% of UBS Group shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent recommendations for Brookfield Asset Management and UBS Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Brookfield Asset Management 0 0 6 0 3.00
UBS Group 0 3 5 0 2.63

Brookfield Asset Management currently has a consensus price target of $47.00, suggesting a potential upside of 7.95%. Given Brookfield Asset Management’s stronger consensus rating and higher possible upside, equities analysts clearly believe Brookfield Asset Management is more favorable than UBS Group.

Profitability

This table compares Brookfield Asset Management and UBS Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Brookfield Asset Management 1.70% 0.86% 0.34%
UBS Group 11.28% 8.01% 0.47%

Summary

UBS Group beats Brookfield Asset Management on 11 of the 17 factors compared between the two stocks.

About Brookfield Asset Management

Brookfield Asset Management Inc. is an alternative asset manager. The Company operates in eight segments. The Asset Management segment manages its listed partnerships, private funds and public markets on behalf of its clients. The Property segment includes the ownership, operation and development of office, retail and other properties. The Renewable power segment operates and develops hydroelectric, wind power and other generating facilities. The Infrastructure segment includes the ownership, operation and development of utilities and agricultural operations, among others. The Residential development segment includes homebuilding, condominium development and land development. The Service activities segment includes construction management and contracting services and property services. The Private equity segment includes the investments and operations overseen by its private equity group. The Corporate activities segment includes the allocation of capital to its operating platforms.

About UBS Group

UBS Group AG is a holding company and conducts its operations through UBS AG and its subsidiaries. The Company comprises Corporate Center and five business divisions: Wealth Management, Wealth Management Americas, Personal & Corporate Banking, Asset Management and the Investment Bank. Wealth Management division provides advice and tailored financial services to wealthy private clients around the world, except those served by Wealth Management Americas. Wealth Management Americas division is a wealth manager in the Americas in terms of financial advisor productivity and invested assets by financial advisor. Personal & Corporate Banking division provides financial products and services to private, corporate and institutional clients in Switzerland. Asset Management division provides investment management products and services, platform solutions and advisory support. Investment Bank division provides investment advice, financial solutions and capital markets access.

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