Sound Point Meridian Capital (NYSE:SPMC) vs. Ares Management (NYSE:ARES) Critical Comparison

Ares Management (NYSE:ARES) and Sound Point Meridian Capital (NYSE:SPMC) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, risk, profitability, institutional ownership, earnings and dividends.

Valuation and Earnings

This table compares Ares Management and Sound Point Meridian Capital”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ares Management	$5.91 billion	7.00	$527.36 million	$2.15	58.34
Sound Point Meridian Capital	$72.51 million	2.88	-$125.87 million	($6.14)	-1.66

Ares Management has higher revenue and earnings than Sound Point Meridian Capital. Sound Point Meridian Capital is trading at a lower price-to-earnings ratio than Ares Management, indicating that it is currently the more affordable of the two stocks.

Dividends

Ares Management pays an annual dividend of $5.40 per share and has a dividend yield of 4.3%. Sound Point Meridian Capital pays an annual dividend of $2.40 per share and has a dividend yield of 23.6%. Ares Management pays out 251.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sound Point Meridian Capital pays out -39.1% of its earnings in the form of a dividend. Ares Management has raised its dividend for 7 consecutive years. Sound Point Meridian Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Ares Management and Sound Point Meridian Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ares Management	10.54%	22.14%	5.58%
Sound Point Meridian Capital	N/A	N/A	N/A

Institutional & Insider Ownership

50.0% of Ares Management shares are held by institutional investors. 36.9% of Ares Management shares are held by company insiders. Comparatively, 0.9% of Sound Point Meridian Capital shares are held 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.

Analyst Recommendations

This is a summary of recent recommendations for Ares Management and Sound Point Meridian Capital, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ares Management	0	5	12	1	2.78
Sound Point Meridian Capital	1	2	1	0	2.00

Ares Management currently has a consensus price target of $159.13, indicating a potential upside of 26.86%. Sound Point Meridian Capital has a consensus price target of $15.12, indicating a potential upside of 48.43%. Given Sound Point Meridian Capital’s higher probable upside, analysts clearly believe Sound Point Meridian Capital is more favorable than Ares Management.

Risk and Volatility

Ares Management has a beta of 1.51, meaning that its stock price is 51% more volatile than the S&P 500. Comparatively, Sound Point Meridian Capital has a beta of 1.2, meaning that its stock price is 20% more volatile than the S&P 500.

Summary

Ares Management beats Sound Point Meridian Capital on 15 of the 18 factors compared between the two stocks.

About Ares Management

Ares Management Corporation operates as an alternative asset manager in the United States, Europe, and Asia. The company's Tradable Credit Group segment manages various types of investment funds, such as commingled and separately managed accounts for institutional investors, and publicly traded vehicles and sub-advised funds for retail investors in the tradable and non-investment grade corporate credit markets. Its Direct Lending Group segment provides financing solutions to small-to-medium sized companies. The company's Private Equity Group segment focuses on majority or shared-control investments primarily in under-capitalized companies. Its Real Estate Group segment invests in new developments and the repositioning of assets, with a focus on control or majority-control investments; and originates and invests in a range of self-originated financing opportunities for middle-market owners and operators of commercial real estate. The firm was previously known as Ares Management, L.P. Ares Management Corporation was founded in 1997 and is headquartered in Los Angeles, California with additional offices in the United States, Europe and Asia. Ares Management GP LLC is the general partner of the company.

About Sound Point Meridian Capital

Sound Point Meridian Capital Inc. is an externally managed, non-diversified closed-end management investment company. Its investment objective is to generate high current income, with a secondary objective to generate capital appreciation, by investing primarily in third-party collateralized loan obligation equity and mezzanine tranches. Sound Point Meridian Capital Inc. is based in NEW YORK.