Critical Review: AllianceBernstein (NYSE:AB) versus BlackRock (NYSE:BLK)

BlackRock (NYSE:BLK) and AllianceBernstein (NYSE:AB) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, dividends, earnings, analyst recommendations, profitability, institutional ownership and risk.

Analyst Ratings

This is a summary of recent ratings and price targets for BlackRock and AllianceBernstein, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
BlackRock	0	3	15	1	2.89
AllianceBernstein	0	6	2	0	2.25

BlackRock presently has a consensus target price of $1,308.89, suggesting a potential upside of 37.25%. AllianceBernstein has a consensus target price of $42.17, suggesting a potential upside of 10.94%. Given BlackRock’s stronger consensus rating and higher probable upside, research analysts clearly believe BlackRock is more favorable than AllianceBernstein.

Insider and Institutional Ownership

80.7% of BlackRock shares are held by institutional investors. Comparatively, 19.3% of AllianceBernstein shares are held by institutional investors. 2.0% of BlackRock shares are held by insiders. Comparatively, 2.7% of AllianceBernstein shares are held by 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.

Profitability

This table compares BlackRock and AllianceBernstein’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
BlackRock	22.93%	14.78%	4.98%
AllianceBernstein	6.62%	21.17%	21.16%

Risk and Volatility

BlackRock has a beta of 1.48, indicating that its share price is 48% more volatile than the S&P 500. Comparatively, AllianceBernstein has a beta of 0.87, indicating that its share price is 13% less volatile than the S&P 500.

Dividends

BlackRock pays an annual dividend of $20.84 per share and has a dividend yield of 2.2%. AllianceBernstein pays an annual dividend of $3.84 per share and has a dividend yield of 10.1%. BlackRock pays out 58.8% of its earnings in the form of a dividend. AllianceBernstein pays out 128.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. BlackRock has increased its dividend for 16 consecutive years.

Valuation & Earnings

This table compares BlackRock and AllianceBernstein”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
BlackRock	$24.22 billion	6.13	$5.55 billion	$35.42	26.92
AllianceBernstein	$4.53 billion	0.77	$299.84 million	$3.00	12.67

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

Summary

BlackRock beats AllianceBernstein on 14 of the 18 factors compared between the two stocks.

About BlackRock

BlackRock, Inc. is a publicly owned investment manager. The firm primarily provides its services to institutional, intermediary, and individual investors including corporate, public, union, and industry pension plans, insurance companies, third-party mutual funds, endowments, public institutions, governments, foundations, charities, sovereign wealth funds, corporations, official institutions, and banks. It also provides global risk management and advisory services. The firm manages separate client-focused equity, fixed income, and balanced portfolios. It also launches and manages open-end and closed-end mutual funds, offshore funds, unit trusts, and alternative investment vehicles including structured funds. The firm launches equity, fixed income, balanced, and real estate mutual funds. It also launches equity, fixed income, balanced, currency, commodity, and multi-asset exchange traded funds. The firm also launches and manages hedge funds. It invests in the public equity, fixed income, real estate, currency, commodity, and alternative markets across the globe. The firm primarily invests in growth and value stocks of small-cap, mid-cap, SMID-cap, large-cap, and multi-cap companies. It also invests in dividend-paying equity securities. The firm invests in investment grade municipal securities, government securities including securities issued or guaranteed by a government or a government agency or instrumentality, corporate bonds, and asset-backed and mortgage-backed securities. It employs fundamental and quantitative analysis with a focus on bottom-up and top-down approach to make its investments. The firm employs liquidity, asset allocation, balanced, real estate, and alternative strategies to make its investments. In real estate sector, it seeks to invest in Poland and Germany. The firm benchmarks the performance of its portfolios against various S&P, Russell, Barclays, MSCI, Citigroup, and Merrill Lynch indices. BlackRock, Inc. was founded in 1988 and is based in New York City with additional offices in Boston, Massachusetts; London, United Kingdom; Gurgaon, India; Hong Kong; Greenwich, Connecticut; Princeton, New Jersey; Edinburgh, United Kingdom; Sydney, Australia; Taipei, Taiwan; Singapore; Sao Paulo, Brazil; Philadelphia, Pennsylvania; Washington, District of Columbia; Toronto, Canada; Wilmington, Delaware; and San Francisco, California.

About AllianceBernstein

AllianceBernstein Holding L.P. is a publicly owned investment manager. The firm is a related adviser The firm manages separate client focused portfolios for its clients. The firm primarily invests in common and preferred stocks, warrants and convertible securities, government and corporate fxed-income securities, commodities, currencies, real estate-related assets and infation-protected securities. The firm employs quantitative analysis along with long-term purchases, short-term purchases, trading, short sales, margin transactions, option strategies including writing covered options, uncovered options and spread strategies to make its investments. The firm obtains external research to complement its in-house research. The firm was formerly known as Alliance Capital Management Holding LP. AllianceBernstein Holding L.P. was founded in 1967 and is based in Nashville,Tennessee.