Financial Analysis: Ares Management L.P. (ARES) and AllianceBernstein Holding L.P. (AB)

Ares Management L.P. (NYSE: ARES) and AllianceBernstein Holding L.P. (NYSE:AB) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, dividends, earnings, profitabiliy, analyst recommendations, institutional ownership and valuation.

Dividends

Ares Management L.P. pays an annual dividend of $0.52 per share and has a dividend yield of 2.9%. AllianceBernstein Holding L.P. pays an annual dividend of $1.96 per share and has a dividend yield of 8.1%. Ares Management L.P. pays out 71.2% of its earnings in the form of a dividend. AllianceBernstein Holding L.P. pays out 89.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Earnings and Valuation

This table compares Ares Management L.P. and AllianceBernstein Holding L.P.’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Ares Management L.P. $1.30 billion 3.00 $241.00 million $0.73 24.93
AllianceBernstein Holding L.P. $232.17 million 9.79 $203.84 million $2.18 11.15

Ares Management L.P. has higher revenue and earnings than AllianceBernstein Holding L.P.. AllianceBernstein Holding L.P. is trading at a lower price-to-earnings ratio than Ares Management L.P., indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Ares Management L.P. and AllianceBernstein Holding L.P.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ares Management L.P. 5.65% 35.09% 6.51%
AllianceBernstein Holding L.P. 6.74% 13.28% 13.28%

Risk & Volatility

Ares Management L.P. has a beta of 1.25, suggesting that its share price is 25% more volatile than the S&P 500. Comparatively, AllianceBernstein Holding L.P. has a beta of 1.56, suggesting that its share price is 56% more volatile than the S&P 500.

Insider and Institutional Ownership

14.7% of Ares Management L.P. shares are held by institutional investors. Comparatively, 22.7% of AllianceBernstein Holding L.P. shares are held by institutional investors. 3.4% of AllianceBernstein Holding L.P. shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Ares Management L.P. and AllianceBernstein Holding L.P., as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ares Management L.P. 0 2 6 0 2.75
AllianceBernstein Holding L.P. 0 1 3 0 2.75

Ares Management L.P. presently has a consensus target price of $20.86, indicating a potential upside of 14.60%. AllianceBernstein Holding L.P. has a consensus target price of $26.33, indicating a potential upside of 8.37%. Given Ares Management L.P.’s higher probable upside, equities research analysts plainly believe Ares Management L.P. is more favorable than AllianceBernstein Holding L.P..

Summary

AllianceBernstein Holding L.P. beats Ares Management L.P. on 9 of the 15 factors compared between the two stocks.

About Ares Management L.P.

Ares Management, L.P. is an alternative asset manager. The Company offers its investors a range of investment strategies. It operates through three segments: Credit Group, Private Equity Group and Real Estate Group. The Credit Group segment manages credit strategies across the non-investment grade credit universe in the United States and Europe. It offers a range of credit strategies across the liquid and illiquid spectrum, including syndicated loans, high yield bonds, credit opportunities, structured credit investments and the United States and European direct lending. The Credit Group provides solutions for traditional fixed income investors. The Private Equity Group segment categorizes its investment strategies as corporate private equity, the United States power and energy infrastructure and special situations. The Real Estate Group segment manages public and private equity and debt strategies. The Real Estate Group manages both a value-add strategy and an opportunistic strategy.

About AllianceBernstein Holding L.P.

AllianceBernstein Holding L.P. is engaged in providing research, investment management and related services to a range of clients through its three buy-side distribution channels: Institutions, Retail and Private Wealth Management, and its sell-side business, Bernstein Research Services. The Company offers a range of investment services, including equity strategies, with global and regional portfolios across capitalization ranges and investment strategies, including value, growth and equities; traditional and unconstrained fixed income strategies, including taxable and tax-exempt strategies; passive management, including index and enhanced index strategies; alternative investments, including hedge funds, fund of funds and private equity, and multi-asset solutions and services, including dynamic asset allocation, customized target-date funds and target-risk funds. The Company’s services span various investment disciplines, including market capitalization, term and geographic locations.

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