The Bank of New York Mellon (NYSE:BK) and Diamond Hill Investment Group (NASDAQ:DHIL) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, risk, profitability, earnings, institutional ownership, valuation and dividends.
Institutional & Insider Ownership
82.3% of The Bank of New York Mellon shares are owned by institutional investors. Comparatively, 54.6% of Diamond Hill Investment Group shares are owned by institutional investors. 0.1% of The Bank of New York Mellon shares are owned by company insiders. Comparatively, 3.4% of Diamond Hill Investment Group shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
Risk and Volatility
The Bank of New York Mellon has a beta of 1.07, meaning that its stock price is 7% more volatile than the S&P 500. Comparatively, Diamond Hill Investment Group has a beta of 1, meaning that its stock price has a similar volatility profile to the S&P 500.
Earnings & Valuation
This table compares The Bank of New York Mellon and Diamond Hill Investment Group's gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| The Bank of New York Mellon | $20.77 billion | 2.01 | $4.44 billion | $4.02 | 11.83 |
| Diamond Hill Investment Group | $136.62 million | 3.71 | $54.96 million | N/A | N/A |
The Bank of New York Mellon has higher revenue and earnings than Diamond Hill Investment Group.
Dividends
The Bank of New York Mellon pays an annual dividend of $1.24 per share and has a dividend yield of 2.6%. Diamond Hill Investment Group pays an annual dividend of $4.00 per share and has a dividend yield of 2.5%. The Bank of New York Mellon pays out 30.8% of its earnings in the form of a dividend. The Bank of New York Mellon has raised its dividend for 1 consecutive years. The Bank of New York Mellon is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Analyst Recommendations
This is a breakdown of recent ratings and target prices for The Bank of New York Mellon and Diamond Hill Investment Group, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| The Bank of New York Mellon | 0 | 5 | 10 | 0 | 2.67 |
| Diamond Hill Investment Group | 0 | 0 | 0 | 0 | N/A |
The Bank of New York Mellon currently has a consensus price target of $49.80, suggesting a potential upside of 5.31%. Given The Bank of New York Mellon's higher probable upside, research analysts plainly believe The Bank of New York Mellon is more favorable than Diamond Hill Investment Group.
Profitability
This table compares The Bank of New York Mellon and Diamond Hill Investment Group's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| The Bank of New York Mellon | 23.09% | 9.89% | 0.89% |
| Diamond Hill Investment Group | 29.63% | 19.59% | 14.90% |
Summary
The Bank of New York Mellon beats Diamond Hill Investment Group on 8 of the 15 factors compared between the two stocks.
