Apollo Global Management (NYSE:APO) and Ares Management (NYSE:ARES) are both large-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, earnings, valuation, profitability, risk and dividends.
Volatility & Risk
Apollo Global Management has a beta of 1.62, suggesting that its share price is 62% more volatile than the S&P 500. Comparatively, Ares Management has a beta of 1.18, suggesting that its share price is 18% more volatile than the S&P 500.
Earnings and Valuation
This table compares Apollo Global Management and Ares Management's top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Apollo Global Management | $2.93 billion | 4.61 | $843.19 million | $2.71 | 21.48 |
| Ares Management | $1.77 billion | 7.86 | $148.88 million | $1.67 | 32.13 |
Apollo Global Management has higher revenue and earnings than Ares Management. Apollo Global Management is trading at a lower price-to-earnings ratio than Ares Management, indicating that it is currently the more affordable of the two stocks.
Analyst Recommendations
This is a breakdown of recent recommendations for Apollo Global Management and Ares Management, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Apollo Global Management | 0 | 4 | 12 | 0 | 2.75 |
| Ares Management | 0 | 4 | 4 | 0 | 2.50 |
Apollo Global Management currently has a consensus target price of $57.3846, suggesting a potential downside of 1.43%. Ares Management has a consensus target price of $55.50, suggesting a potential upside of 3.43%. Given Ares Management's higher possible upside, analysts clearly believe Ares Management is more favorable than Apollo Global Management.
Profitability
This table compares Apollo Global Management and Ares Management's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Apollo Global Management | N/A | 30.32% | 6.29% |
| Ares Management | 7.22% | 16.07% | 2.09% |
Insider and Institutional Ownership
72.0% of Apollo Global Management shares are held by institutional investors. Comparatively, 42.4% of Ares Management shares are held by institutional investors. 9.3% of Apollo Global Management shares are held by company insiders. Comparatively, 59.7% of Ares Management shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
Dividends
Apollo Global Management pays an annual dividend of $2.40 per share and has a dividend yield of 4.1%. Ares Management pays an annual dividend of $1.88 per share and has a dividend yield of 3.5%. Apollo Global Management pays out 88.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ares Management pays out 112.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Apollo Global Management has raised its dividend for 1 consecutive years and Ares Management has raised its dividend for 1 consecutive years. Apollo Global Management is clearly the better dividend stock, given its higher yield and lower payout ratio.
Summary
Apollo Global Management beats Ares Management on 11 of the 16 factors compared between the two stocks.
