Critical Survey: Hennessy Advisors (NASDAQ:HNNA) vs. Sprott (NYSE:SII)

Sprott (NYSE:SII) and Hennessy Advisors (NASDAQ:HNNA) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their risk, institutional ownership, earnings, profitability, dividends, valuation and analyst recommendations.

Earnings and Valuation

This table compares Sprott and Hennessy Advisors”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sprott	$178.65 million	12.95	$49.29 million	$1.95	45.99
Hennessy Advisors	$35.82 million	2.21	$7.10 million	$1.25	8.14

Sprott has higher revenue and earnings than Hennessy Advisors. Hennessy Advisors is trading at a lower price-to-earnings ratio than Sprott, indicating that it is currently the more affordable of the two stocks.

Dividends

Sprott pays an annual dividend of $1.60 per share and has a dividend yield of 1.8%. Hennessy Advisors pays an annual dividend of $0.55 per share and has a dividend yield of 5.4%. Sprott pays out 82.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Hennessy Advisors pays out 44.0% of its earnings in the form of a dividend. Sprott has raised its dividend for 1 consecutive years. Hennessy Advisors is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

28.3% of Sprott shares are owned by institutional investors. Comparatively, 10.3% of Hennessy Advisors shares are owned by institutional investors. 18.3% of Sprott shares are owned by company insiders. Comparatively, 37.4% of Hennessy Advisors shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Sprott and Hennessy Advisors’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sprott	23.26%	15.01%	11.97%
Hennessy Advisors	27.55%	10.48%	6.38%

Analyst Ratings

This is a summary of current recommendations and price targets for Sprott and Hennessy Advisors, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sprott	0	1	3	0	2.75
Hennessy Advisors	0	0	1	0	3.00

Volatility and Risk

Sprott has a beta of 1, meaning that its stock price has a similar volatility profile to the S&P 500.Comparatively, Hennessy Advisors has a beta of 0.7, meaning that its stock price is 30% less volatile than the S&P 500.

Summary

Sprott beats Hennessy Advisors on 11 of the 16 factors compared between the two stocks.

About Sprott

Sprott Inc. is a publicly owned asset management holding company. Through its subsidiaries, the firm provides asset management, portfolio management, wealth management, fund management, and administrative and consulting services to its clients. It offers mutual funds, hedge funds, and offshore funds, along with managed accounts. Further, the firm also provides broker-dealer activities. Sprott Inc. was formed on February 13, 2008 and is based in Toronto, Canada.

About Hennessy Advisors

Hennessy Advisors, Inc. is an employee owned investment manager. It provides its services to Hennessy Funds and investment companies. The firm launches and manages equity, fixed income, and balanced mutual funds. It invests in the public equity and fixed income markets across the globe. The firm primarily invests in growth stocks of companies. It conducts in-house research to make its investments. Hennessy Advisors, Inc. was founded in 1989 and is based in Novato, California with additional offices in Boston, Massachusetts and Chapel Hill, North Carolina.