Critical Review: GAMCO Investors (NYSE:GAMI) & Oppenheimer (NYSE:OPY)

Oppenheimer (NYSE:OPY) and GAMCO Investors (NYSE:GAMI) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, valuation, risk, profitability, analyst recommendations, earnings and institutional ownership.

Insider and Institutional Ownership

32.3% of Oppenheimer shares are owned by institutional investors. Comparatively, 3.3% of GAMCO Investors shares are owned by institutional investors. 34.4% of Oppenheimer shares are owned by company insiders. Comparatively, 81.2% of GAMCO Investors shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Risk and Volatility

Oppenheimer has a beta of 1.16, suggesting that its stock price is 16% more volatile than the S&P 500. Comparatively, GAMCO Investors has a beta of 1, suggesting that its stock price has a similar volatility profile to the S&P 500.

Dividends

Oppenheimer pays an annual dividend of $0.60 per share and has a dividend yield of 1.3%. GAMCO Investors pays an annual dividend of $0.16 per share and has a dividend yield of 0.7%. Oppenheimer pays out 16.2% of its earnings in the form of a dividend. GAMCO Investors pays out 6.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Profitability

This table compares Oppenheimer and GAMCO Investors’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Oppenheimer	3.25%	5.90%	1.53%
GAMCO Investors	25.81%	34.27%	23.66%

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Oppenheimer and GAMCO Investors, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Oppenheimer	0	0	0	0	N/A
GAMCO Investors	0	0	0	0	N/A

Valuation and Earnings

This table compares Oppenheimer and GAMCO Investors’ revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Oppenheimer	$1.25 billion	0.38	$30.18 million	$3.71	12.49
GAMCO Investors	$235.87 million	2.55	$60.21 million	$2.40	10.10

GAMCO Investors has lower revenue, but higher earnings than Oppenheimer. GAMCO Investors is trading at a lower price-to-earnings ratio than Oppenheimer, indicating that it is currently the more affordable of the two stocks.

Summary

GAMCO Investors beats Oppenheimer on 7 of the 13 factors compared between the two stocks.

About Oppenheimer

Oppenheimer Holdings Inc. operates as a middle-market investment bank and full-service broker-dealer in the Americas, Europe, the Middle East, and Asia. The company provides brokerage services covering corporate equity and debt securities, money market instruments, exchange-traded options and futures contracts, municipal bonds, mutual funds, exchange-traded funds, and unit investment trusts; financial and wealth planning services; and margin lending services. It offers asset management services, including separately managed accounts, mutual fund managed accounts, discretionary portfolio management programs, non-discretionary investment advisory and consultation services, alternative investments, portfolio enhancement programs, and institutional taxable fixed income portfolio management strategies and solutions, as well as taxable and non-taxable fixed income portfolios and strategies. In addition, the company offers investment banking services, such as strategic advisory services and capital markets products; merger and acquisition, equities capital market, debt capital market, debt advisory and restructuring, and fund placement services; and institutional equity sales and trading, equity research, equity derivatives and index options, convertible bonds, event driven sales and trading, and portfolio and electronic trading. Further, it provides institutional fixed income sales and trading, fixed income research, public finance, and municipal trading services; and proprietary trading and investment activities. Additionally, the company offers underwriting, market-making, trust, and discount services, as well as a cloud-based financial market. It serves high-net-worth individuals and families, corporate executives, public and private businesses, institutions and corporations, governments, financial sponsors, and domestic and international investors. Oppenheimer Holdings Inc. was founded in 1881 and is headquartered in New York, New York.

About GAMCO Investors

GAMCO Investors, Inc. is a publicly owned holding investment manager. The firm also provides wealth management, investment advisory, institutional research, brokerage, dealer, underwriting, and distribution services to its clients. It provides its services to individuals including high net worth individuals, corporate pension and profit-sharing plans, foundations, endowments, jointly trust plans, municipalities, and investment companies. The firm, through its subsidiaries, manages separate client-focused equity, fixed income, and balanced portfolios. It also launches equity, fixed income, and balanced mutual funds and manages equity mutual funds for its clients. Through its subsidiaries the firm invests in the public equity and fixed income markets across the globe. It invests in value stocks of companies. The firm employs fundamental analysis with a focus on bottom-up stock picking approach to create its portfolios. It conducts in-house research to make its investments. The firm was founded in 1976 and is based in Rye, New York with additional offices in Greenwich, Connecticut; Bannockburn, Illinois; and Tokyo, Japan. GAMCO Investors, Inc. operates as a subsidiary of Ggcp Holdings Llc.