Analyzing State Street (STT) and Oaktree Capital Group (OAK)
State Street (NYSE: STT) and Oaktree Capital Group (NYSE:OAK) are both mid-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, earnings, risk, profitability, analyst recommendations, institutional ownership and valuation.
Volatility and Risk
State Street has a beta of 1.36, suggesting that its share price is 36% more volatile than the S&P 500. Comparatively, Oaktree Capital Group has a beta of 0.61, suggesting that its share price is 39% less volatile than the S&P 500.
State Street pays an annual dividend of $1.68 per share and has a dividend yield of 1.8%. Oaktree Capital Group pays an annual dividend of $2.24 per share and has a dividend yield of 5.3%. State Street pays out 29.1% of its earnings in the form of a dividend. Oaktree Capital Group pays out 51.5% 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. State Street has increased its dividend for 6 consecutive years.
This is a breakdown of current recommendations and price targets for State Street and Oaktree Capital Group, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Oaktree Capital Group||0||5||1||0||2.17|
State Street presently has a consensus price target of $96.38, suggesting a potential upside of 4.24%. Oaktree Capital Group has a consensus price target of $49.50, suggesting a potential upside of 17.02%. Given Oaktree Capital Group’s higher possible upside, analysts plainly believe Oaktree Capital Group is more favorable than State Street.
This table compares State Street and Oaktree Capital Group’s 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%|
Earnings and Valuation
This table compares State Street and Oaktree Capital Group’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|State Street||$10.64 billion||3.22||$2.14 billion||$5.77||16.02|
|Oaktree Capital Group||$1.13 billion||5.87||$194.70 million||$4.35||9.72|
State Street has higher revenue and earnings than Oaktree Capital Group. Oaktree Capital Group is trading at a lower price-to-earnings ratio than State Street, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
87.9% of State Street shares are owned by institutional investors. Comparatively, 22.1% of Oaktree Capital Group shares are owned by institutional investors. 0.7% of State Street shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
State Street beats Oaktree Capital Group on 13 of the 18 factors compared between the two stocks.
About State Street
State Street Corporation is a financial holding company. The Company operates through two lines of business: Investment Servicing and Investment Management. The Company, through its subsidiary, State Street Bank and Trust Company (State Street Bank), provides a range of financial products and services to institutional investors across the world. Investment servicing line of business performs functions, such as providing institutional investors with clearing, settlement and payment services. The Company operates investment management line of business through State Street Global Advisors (SSGA). SSGA provides a range of investment management, investment research and investment advisory services to corporations, public funds and other investors. Its clients include mutual funds, collective investment funds and other investment pools, corporate and public retirement plans, insurance companies, foundations, endowments and investment managers.
About Oaktree Capital Group
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.
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