Head to Head Review: The Carlyle Group (NASDAQ:CG) versus B. Riley Financial (NASDAQ:RILY)

The Carlyle Group (NASDAQ:CG) and B. Riley Financial (NASDAQ:RILY) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, dividends, valuation, earnings and profitability.

Analyst Ratings

This is a summary of current ratings and price targets for The Carlyle Group and B. Riley Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
The Carlyle Group	0	9	6	0	2.40
B. Riley Financial	0	0	0	0	N/A

The Carlyle Group presently has a consensus target price of $46.07, suggesting a potential upside of 14.79%. Given The Carlyle Group’s higher probable upside, research analysts clearly believe The Carlyle Group is more favorable than B. Riley Financial.

Volatility & Risk

The Carlyle Group has a beta of 1.75, meaning that its stock price is 75% more volatile than the S&P 500. Comparatively, B. Riley Financial has a beta of 1.32, meaning that its stock price is 32% more volatile than the S&P 500.

Profitability

This table compares The Carlyle Group and B. Riley Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
The Carlyle Group	-23.04%	23.92%	7.00%
B. Riley Financial	-9.28%	-25.84%	-1.75%

Dividends

The Carlyle Group pays an annual dividend of $1.40 per share and has a dividend yield of 3.5%. B. Riley Financial pays an annual dividend of $2.00 per share and has a dividend yield of 37.0%. The Carlyle Group pays out -78.2% of its earnings in the form of a dividend. B. Riley Financial pays out -39.9% 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.

Valuation & Earnings

This table compares The Carlyle Group and B. Riley Financial’s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
The Carlyle Group	$1.59 billion	9.08	-$608.40 million	($1.79)	-22.42
B. Riley Financial	$1.55 billion	0.11	-$99.91 million	($5.01)	-1.08

B. Riley Financial has lower revenue, but higher earnings than The Carlyle Group. The Carlyle Group is trading at a lower price-to-earnings ratio than B. Riley Financial, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

55.9% of The Carlyle Group shares are owned by institutional investors. Comparatively, 50.2% of B. Riley Financial shares are owned by institutional investors. 27.2% of The Carlyle Group shares are owned by company insiders. Comparatively, 32.9% of B. Riley Financial shares are owned 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.

Summary

The Carlyle Group beats B. Riley Financial on 10 of the 15 factors compared between the two stocks.

About The Carlyle Group

The Carlyle Group Inc. is an investment firm specializing in direct and fund of fund investments. Within direct investments, it specializes in management-led/ Leveraged buyouts, privatizations, divestitures, strategic minority equity investments, structured credit, global distressed and corporate opportunities, small and middle market, equity private placements, consolidations and buildups, senior debt, mezzanine and leveraged finance, and venture and growth capital financings, seed/startup, early venture, emerging growth, turnaround, mid venture, late venture, PIPES. The firm invests across four segments which include Corporate Private Equity, Real Assets, Global Market Strategies, and Solutions. The firm typically invests in industrial, agribusiness, ecological sector, fintech, airports, parking, Plastics, Rubber, diversified natural resources, minerals, farming, aerospace, defense, automotive, consumer, retail, industrial, infrastructure, energy, power, healthcare, software, software enabled services, semiconductors, communications infrastructure, financial technology, utilities, gaming, systems and related supply chain, electronic systems, systems, oil and gas, processing facilities, power generation assets, technology, systems, real estate, financial services, transportation, business services, telecommunications, media, and logistics sectors. Within the industrial sector, the firm invests in manufacturing, building products, packaging, chemicals, metals and mining, forestry and paper products, and industrial consumables and services. In consumer and retail sectors, it invests in food and beverage, retail, restaurants, consumer products, domestic consumption, consumer services, personal care products, direct marketing, and education. Within aerospace, defense, business services, and government services sectors, it seeks to invest in defense electronics, manufacturing and services, government contracting and services, information technology, distribution companies. In telecommunication and media sectors, it invests in cable TV, directories, publishing, entertainment and content delivery services, wireless infrastructure/services, fixed line networks, satellite services, broadband and Internet, and infrastructure. Within real estate, the firm invests in office, hotel, industrial, retail, for sale residential, student housing, hospitality, multifamily residential, homebuilding and building products, and senior living sectors. The firm seeks to make investments in growing business including those with overleveraged balance sheets. The firm seeks to hold its investments for four to six years. In the healthcare sector, it invests in healthcare services, outsourcing services, companies running clinical trials for pharmaceutical companies, managed care, pharmaceuticals, pharmaceutical related services, healthcare IT, medical, products, and devices. It seeks to invest in companies based in Sub-Saharan focusing on Ghana, Kenya, Mozambique, Botswana, Nigeria, Uganda, West Africa, North Africa and South Africa focusing on Tanzania and Zambia; Asia focusing on Pakistan, India, South East Asia, Indonesia, Philippines, Vietnam, Korea, and Japan; Australia; New Zealand; Europe focusing on France, Italy, Denmark, United Kingdom, Germany, Austria, Belgium, Finland, Iceland, Ireland, Netherlands, Norway, Portugal, Spain, Benelux , Sweden, Switzerland, Hungary, Poland, and Russia; Middle East focusing on Bahrain, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Turkey, and UAE; North America focusing on United States which further invest in Southeastern United States, Texas, Boston, San Francisco Bay Area and Pacific Northwest; Asia Pacific; Soviet Union, Central-Eastern Europe, and Israel; Nordic region; and South America focusing on Mexico, Argentina, Brazil, Chile, and Peru. The firm seeks to invest in food, financial, and healthcare industries in Western China. In the real estate sector, the firm seeks to invest in various locations across Europe focusing on France and Central Europe, United States, Asia focusing on China, and Latin America. It typically invests between $1 million and $50 million for venture investments and between $50 million and $2 billion for buyouts in companies with enterprise value of between $31.57 million and $1000 million and sales value of $10 million and $500 million. It seeks to invest in companies with market capitalization greater than $50 million and EBITDA between $5 million to $25 million. It prefers to take a majority or a minority stake. While investing in Japan, it does not invest in companies with more than 1,000 employees and prefers companies' worth between $100 million and $150 million. The firm originates, structures, and acts as lead equity investor in the transactions. The Carlyle Group Inc. was founded in 1987 and is based in Washington, District of Columbia with additional offices in 21 countries across 5 continents (North America, South America, Asia, Australia and Europe).

About B. Riley Financial

B. Riley Financial, Inc., through its subsidiaries, provides financial services to corporate, institutional, and high net worth clients in North America, Australia, the Asia Pacific, and Europe. The company operates through six segments: Capital Markets, Wealth Management, Financial Consulting, Auction and Liquidation, Communications, and Consumer. The Capital Markets segments offers investment banking, equity research, institutional sales and trading, securities lending, fund and asset management, direct lending, venture capital, proprietary trading, and investment services; merger and acquisition, restructuring advisory, and recapitalization services; public and private equity offerings; and debt financing solutions. This segment also trades in equity securities. The Wealth Management segment provides wealth management and tax services. The Financial Consulting segment offers bankruptcy restructuring and turnaround management, forensic accounting and litigation support, valuation and appraisal, and real estate services. The Auction and Liquidation Segment provides auction and liquidation services. The Communications segment offers dial-up, mobile broadband and digital subscriber line services under the NetZero and Juno brands; cloud communication services; VoIP cloud-based technology and communication devices and subscription services through magicJack; and mobile phone voice, text, and data services and devices through Marconi Wireless. The Consumer segment sells laptop and computer accessories. The company was formerly known as Great American Group, Inc. and changed its name to B. Riley Financial, Inc. in November 2014. B. Riley Financial, Inc. was founded in 1973 and is headquartered in Los Angeles, California.