Financial Engines (NASDAQ: FNGN) and Medley Management (NYSE:MDLY) are both small-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, earnings, valuation, profitability, risk and dividends.

Profitability

This table compares Financial Engines and Medley Management’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Financial Engines 10.56% 7.60% 6.95%
Medley Management 3.14% -35.40% 14.52%

Risk and Volatility

Financial Engines has a beta of 2.15, meaning that its share price is 115% more volatile than the S&P 500. Comparatively, Medley Management has a beta of 1.51, meaning that its share price is 51% more volatile than the S&P 500.

Insider and Institutional Ownership

56.9% of Medley Management shares are owned by institutional investors. 9.3% of Financial Engines shares are owned by insiders. Comparatively, 5.1% of Medley Management shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and price targets for Financial Engines and Medley Management, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Financial Engines 1 1 5 0 2.57
Medley Management 0 3 0 0 2.00

Financial Engines currently has a consensus target price of $38.33, indicating a potential upside of 35.69%. Medley Management has a consensus target price of $9.25, indicating a potential upside of 42.31%. Given Medley Management’s higher probable upside, analysts plainly believe Medley Management is more favorable than Financial Engines.

Earnings & Valuation

This table compares Financial Engines and Medley Management’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Financial Engines $423.94 million 4.22 $28.56 million $0.77 36.69
Medley Management $76.03 million 0.47 $990,000.00 $0.22 29.55

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

Dividends

Financial Engines pays an annual dividend of $0.28 per share and has a dividend yield of 1.0%. Medley Management pays an annual dividend of $0.80 per share and has a dividend yield of 12.3%. Financial Engines pays out 36.4% of its earnings in the form of a dividend. Medley Management pays out 363.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Financial Engines beats Medley Management on 12 of the 16 factors compared between the two stocks.

About Financial Engines

Financial Engines, Inc. is a provider of independent, technology-enabled financial advisory services, discretionary portfolio management, personalized investment advice, financial and retirement income planning, and financial education and guidance. The Company offers personalized plans for saving, investing, and generating retirement income, as well as by providing assessments of retirement income needs and readiness. The Company’s advice and planning services cover employer-sponsored defined contribution (DC) accounts (401(k), 457, and 403(b) plans), individual retirement account (IRA) accounts, and taxable accounts. For individuals, the Company provides discretionary portfolio management, personalized investment advice, financial and retirement income planning, financial education and guidance. The Company maintains two types of relationships with individuals: DC plan participants in the workplace and Individuals outside the workplace.

About Medley Management

Medley Management Inc. is an asset management firm offering yield solutions to retail and institutional investors. The Company operates in the investment management segment. It is focused on credit-related investment strategies, primarily originating senior secured loans to private middle market companies in the United States. The Company generally holds these loans to maturity. Its national direct origination franchise provides capital to the middle market in the United States. The Company has over $4.8 billion of assets under management (AUM) in approximately two business development companies (BDCs), Medley Capital Corporation (MCC) and Sierra Income Corporation (SIC), as well as private investment vehicles. It has over $5 billion of AUM. The Company provides capital to over 300 companies across approximately 35 industries in North America. The Company’s long-dated private funds include MOF I, MOF II and MOF III. Its private funds are managed through partnership structures

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