Fortress Investment Group (NYSE: FIG) and Safeguard Scientifics (NYSE:SFE) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, analyst recommendations, valuation, institutional ownership, profitability, earnings and dividends.

Earnings and Valuation

This table compares Fortress Investment Group and Safeguard Scientifics’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Fortress Investment Group $950.66 million 1.84 $273.52 million $0.44 18.14
Safeguard Scientifics N/A N/A -$17.72 million ($4.76) -2.61

Fortress Investment Group has higher revenue and earnings than Safeguard Scientifics. Safeguard Scientifics is trading at a lower price-to-earnings ratio than Fortress Investment Group, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Fortress Investment Group and Safeguard Scientifics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Fortress Investment Group 10.61% 38.79% 15.58%
Safeguard Scientifics N/A -61.90% -42.77%

Risk & Volatility

Fortress Investment Group has a beta of 1.95, indicating that its stock price is 95% more volatile than the S&P 500. Comparatively, Safeguard Scientifics has a beta of 1.31, indicating that its stock price is 31% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Fortress Investment Group and Safeguard Scientifics, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Fortress Investment Group 0 4 0 0 2.00
Safeguard Scientifics 0 0 0 0 N/A

Fortress Investment Group currently has a consensus target price of $6.00, indicating a potential downside of 24.81%. Given Fortress Investment Group’s higher probable upside, equities research analysts plainly believe Fortress Investment Group is more favorable than Safeguard Scientifics.

Institutional & Insider Ownership

40.2% of Fortress Investment Group shares are held by institutional investors. Comparatively, 77.6% of Safeguard Scientifics shares are held by institutional investors. 45.2% of Fortress Investment Group shares are held by company insiders. Comparatively, 2.7% of Safeguard Scientifics shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

Fortress Investment Group pays an annual dividend of $0.36 per share and has a dividend yield of 4.5%. Safeguard Scientifics does not pay a dividend. Fortress Investment Group pays out 81.8% 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

Fortress Investment Group beats Safeguard Scientifics on 10 of the 12 factors compared between the two stocks.

About Fortress Investment Group

Fortress Investment Group LLC (Fortress) is an investment management firm. The Company operates through segments, including private equity funds, permanent capital vehicles, credit hedge funds, credit PE funds, liquid hedge funds and Logan Circle. Its business is to sponsor the formation of, and provide investment management services for, various investment funds, permanent capital vehicles and related managed accounts (the Fortress Funds). Fortress’s sources of income from the Fortress Funds are management fees, incentive income and investment income on its investments in the funds. As of December 31, 2016, the Company’s private equity business manages approximately $13.5 billion of assets under management (AUM); credit funds business manages approximately $18.1 billion of AUM; liquid hedge funds business manages over $4.6 billion of AUM, and Logan Circle business manages approximately $33.4 billion of AUM.

About Safeguard Scientifics

Safeguard Scientifics, Inc. is engaged in providing capital to technology companies within the fields of healthcare, financial services and digital media. The Company holds interest in companies, which it refers to as partner companies. As of December 31, 2016, the Company held interests in 29 non-consolidated partner companies. The Company offers operational and management support to each of its partner companies. In addition to management and operational support, the Company offers ongoing planning and development assessment. It provides mentoring, advice and guidance to develop partner company management. The Company serves on the boards of directors of its partner companies, working with them to develop and implement strategic and operating plans. It measures and monitors achievement of these plans through regular review of operational and financial performance measurements.

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