Analyzing Blackstone Group (NYSE:BX) and Great Elm Capital (NYSE:GECC)

Blackstone Group (NYSE:BX) and Great Elm Capital (NASDAQ:GECC) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, earnings, risk, profitability, analyst recommendations, institutional ownership and valuation.

Volatility and Risk

Blackstone Group has a beta of 1.51, suggesting that its share price is 51% more volatile than the S&P 500. Comparatively, Great Elm Capital has a beta of 0.68, suggesting that its share price is 32% less volatile than the S&P 500.

Dividends

Blackstone Group pays an annual dividend of $2.44 per share and has a dividend yield of 3.9%. Great Elm Capital pays an annual dividend of $1.00 per share and has a dividend yield of 12.4%. Blackstone Group pays out 105.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Great Elm Capital pays out 69.4% of its earnings in the form of a dividend. Blackstone Group has increased its dividend for 6 consecutive years. Great Elm Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Blackstone Group and Great Elm Capital, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Blackstone Group 0 7 5 0 2.42
Great Elm Capital 0 0 0 0 N/A

Blackstone Group presently has a consensus price target of $60.80, suggesting a potential downside of 3.42%. Given Blackstone Group’s higher possible upside, equities research analysts plainly believe Blackstone Group is more favorable than Great Elm Capital.

Profitability

This table compares Blackstone Group and Great Elm Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Blackstone Group 27.93% 14.07% 6.41%
Great Elm Capital -68.41% 10.59% 3.69%

Earnings & Valuation

This table compares Blackstone Group and Great Elm Capital’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Blackstone Group $7.34 billion 5.66 $2.05 billion $2.31 27.25
Great Elm Capital $27.75 million 2.92 -$9.01 million $1.44 5.59

Blackstone Group has higher revenue and earnings than Great Elm Capital. Great Elm Capital is trading at a lower price-to-earnings ratio than Blackstone Group, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

53.9% of Blackstone Group shares are owned by institutional investors. Comparatively, 16.9% of Great Elm Capital shares are owned by institutional investors. 1.0% of Blackstone Group shares are owned by company insiders. Comparatively, 1.4% of Great Elm Capital shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Blackstone Group beats Great Elm Capital on 13 of the 16 factors compared between the two stocks.

About Blackstone Group

The Blackstone Group Inc. is an alternative asset management firm specializing in real estate, private equity, hedge fund solutions, credit, secondary funds of funds, and multi-asset class strategies. The firm typically invests in early-stage companies. It also provide capital markets services. The real estate segment specializes in opportunistic, core+ investments as well as debt investment opportunities collateralized by commercial real estate, and stabilized income-oriented commercial real estate across North America, Europe and Asia. The firm's corporate private equity business pursues transactions throughout the world across a variety of transaction types, including large buyouts, mid-cap buyouts, buy and build platforms, which involves multiple acquisitions behind a single management team and platform, and growth equity/development projects involving significant minority investments in operating companies and greenfield development projects in energy and power, financial services, healthcare, enterprise tech and consumer, as well as consumer technologies. Its hedge fund business manages a broad range of commingled and customized fund solutions and its credit business focuses on loans, and securities of non-investment grade companies spread across the capital structure including senior debt, subordinated debt, preferred stock and common equity. The Blackstone Group Inc. was founded in 1985 and is headquartered in New York, New York with additional offices across Asia, Europe and North America.

About Great Elm Capital

Great Elm Capital Corporation is a business development company which specializes in loan and mezzanine, middle market investments. The fund prefers to invest in media, commercial services and supplies, healthcare, telecommunication services, communications equipment. It typically makes equity investments between $3 million and $10 million in companies with revenues between $3 million and $75 million.

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