Comparing Brookfield Asset Management (NYSE:BAM) and XP (NASDAQ:XP)

Brookfield Asset Management (NYSE:BAM) and XP (NASDAQ:XP) are both large-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, institutional ownership, risk, valuation, earnings and dividends.

Profitability

This table compares Brookfield Asset Management and XP’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Brookfield Asset Management	51.59%	29.81%	16.67%
XP	27.51%	23.08%	1.37%

Dividends

Brookfield Asset Management pays an annual dividend of $2.01 per share and has a dividend yield of 4.1%. XP pays an annual dividend of $0.18 per share and has a dividend yield of 0.9%. Brookfield Asset Management pays out 132.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. XP pays out 10.4% of its earnings in the form of a dividend. Brookfield Asset Management has raised its dividend for 2 consecutive years. Brookfield Asset Management is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current ratings and price targets for Brookfield Asset Management and XP, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Brookfield Asset Management	2	9	6	1	2.33
XP	0	3	5	1	2.78

Brookfield Asset Management currently has a consensus price target of $61.82, indicating a potential upside of 26.51%. XP has a consensus price target of $22.86, indicating a potential upside of 9.89%. Given Brookfield Asset Management’s higher possible upside, analysts clearly believe Brookfield Asset Management is more favorable than XP.

Insider & Institutional Ownership

68.4% of Brookfield Asset Management shares are held by institutional investors. Comparatively, 59.2% of XP shares are held by institutional investors. 11.0% of Brookfield Asset Management shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Brookfield Asset Management and XP”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Brookfield Asset Management	$4.82 billion	16.62	$2.49 billion	$1.52	32.15
XP	$3.30 billion	3.39	$925.91 million	$1.73	12.02

Brookfield Asset Management has higher revenue and earnings than XP. XP is trading at a lower price-to-earnings ratio than Brookfield Asset Management, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Brookfield Asset Management has a beta of 1.38, meaning that its stock price is 38% more volatile than the S&P 500. Comparatively, XP has a beta of 1.26, meaning that its stock price is 26% more volatile than the S&P 500.

Summary

Brookfield Asset Management beats XP on 14 of the 17 factors compared between the two stocks.

About Brookfield Asset Management

Brookfield Asset Management Ltd. is a real estate investment firm specializing in alternative asset management services. Its renewable power and transition business includes the operates in the hydroelectric, wind, solar, distributed generation, and sustainable solution sector. The company's infrastructure business engages in the utilities, transport, midstream, and data infrastructure sectors. In addition, its private equity business offers industrial, infrastructure, and business services sectors; and real estate business, which includes housing, logistics, hospitality, science and innovation, office, and retail sectors. Further, it provides credit business; and insurance solution in the reinsurance, annuities, operating platform, and investment solutions sectors. Brookfield Asset Management Ltd. was incorporated in 2022 and is headquartered in Toronto, Canada.

About XP

XP Inc. provides financial products and services in Brazil. It offers securities brokerage, private pension plans, commercial, and investment banking products, such as loan operations and transactions in the foreign exchange markets and deposits; product structuring and capital markets services for corporate clients and issuers of fixed income products; advisory services for mass-affluent and institutional clients; and wealth management services for high-net-worth customers and institutional clients. The company also offers XP Educação, an online financial education portal that offers seminars, classes, and learning tools to help teach individuals on topics, such as basics of investing, techniques, and investment strategies, as well as insurance brokerage services. In addition, it operates XP Platform, an open product platform that provides clients to access investment products in the market, including equity and fixed income securities, mutual and hedge funds, structured products, life insurance, pension plans, real-estate investment funds, and others. The company was founded in 2001 and is based in São Paulo, Brazil.