Fifth Street Asset Management (OTCMKTS: FSAM) and KKR & Co. L.P. (NYSE:KKR) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, earnings, risk, dividends, profitability and analyst recommendations.

Dividends

Fifth Street Asset Management pays an annual dividend of $0.13 per share and has a dividend yield of 10.0%. KKR & Co. L.P. pays an annual dividend of $0.68 per share and has a dividend yield of 3.0%. Fifth Street Asset Management pays out -92.9% of its earnings in the form of a dividend. KKR & Co. L.P. pays out 34.3% 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. Fifth Street Asset Management is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

8.6% of Fifth Street Asset Management shares are owned by institutional investors. Comparatively, 65.1% of KKR & Co. L.P. shares are owned by institutional investors. 85.4% of Fifth Street Asset Management shares are owned 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 summary of current ratings for Fifth Street Asset Management and KKR & Co. L.P., as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Fifth Street Asset Management 0 0 0 0 N/A
KKR & Co. L.P. 0 4 6 0 2.60

KKR & Co. L.P. has a consensus target price of $24.56, suggesting a potential upside of 8.89%. Given KKR & Co. L.P.’s higher possible upside, analysts clearly believe KKR & Co. L.P. is more favorable than Fifth Street Asset Management.

Profitability

This table compares Fifth Street Asset Management and KKR & Co. L.P.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Fifth Street Asset Management -20.92% -626.41% -2.71%
KKR & Co. L.P. 35.65% 9.39% 3.94%

Volatility & Risk

Fifth Street Asset Management has a beta of 0.34, meaning that its share price is 66% less volatile than the S&P 500. Comparatively, KKR & Co. L.P. has a beta of 1.52, meaning that its share price is 52% more volatile than the S&P 500.

Earnings and Valuation

This table compares Fifth Street Asset Management and KKR & Co. L.P.’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Fifth Street Asset Management $82.55 million 0.80 -$1.53 million ($0.14) -9.29
KKR & Co. L.P. $1.91 billion 5.64 $309.30 million $1.98 11.39

KKR & Co. L.P. has higher revenue and earnings than Fifth Street Asset Management. Fifth Street Asset Management is trading at a lower price-to-earnings ratio than KKR & Co. L.P., indicating that it is currently the more affordable of the two stocks.

Summary

KKR & Co. L.P. beats Fifth Street Asset Management on 12 of the 15 factors compared between the two stocks.

About Fifth Street Asset Management

Fifth Street Asset Management Inc. is an alternative asset manager. The Company provides asset management services to its investment funds (the Fifth Street Funds or the funds), which consist of Fifth Street Finance Corp. (FSC) and Fifth Street Senior Floating Rate Corp. (FSFR), both publicly-traded business development companies (together, the BDCs). Its segment provides asset management services to the Fifth Street Funds. The Company conducts all of its operations through its subsidiaries, Fifth Street Management LLC (FSM), Fifth Street CLO Management LLC (CLO Management) and FSCO GP LLC (FSCO GP). The funds, managed by the Company, provide financing solutions to small and mid-sized companies across their capital structures, mainly in connection with investments by private equity sponsors. It provides credit solutions across the capital structure, including one-stop financing, unitranche debt, senior secured debt, mezzanine debt, equity co-investments and venture debt financing.

About KKR & Co. L.P.

KKR & CO. L.P. (KKR) is a global investment firm that manages investments across multiple asset classes, including private equity, energy, infrastructure, real estate, credit and hedge funds. The Company’s business offers a range of investment management services to its fund investors, and provides capital markets services to its firm, its portfolio companies and third parties. The Company conducts its business with offices across the world, providing it with a global platform for sourcing transactions, raising capital and carrying out capital markets activities. The Company operates through four segments: Private Markets, Public Markets, Capital Markets and Principal Activities. It operates and reports its combined credit and hedge funds businesses through the Public Markets segment. The Capital Markets segment consists primarily of its global capital markets business. Through its Principal Activities segment, the Company manages the firm’s assets and deploys capital.

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