Diamond Hill Investment Group (NASDAQ:DHIL) versus B. Riley Financial (NASDAQ:RILY) Critical Survey

Diamond Hill Investment Group (NASDAQ:DHILGet Rating) and B. Riley Financial (NASDAQ:RILYGet Rating) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, analyst recommendations, risk, valuation, institutional ownership, earnings and profitability.

Risk & Volatility

Diamond Hill Investment Group has a beta of 1.02, suggesting that its share price is 2% more volatile than the S&P 500. Comparatively, B. Riley Financial has a beta of 1.83, suggesting that its share price is 83% more volatile than the S&P 500.

Profitability

This table compares Diamond Hill Investment Group and B. Riley Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Diamond Hill Investment Group 31.87% 33.22% 22.80%
B. Riley Financial -3.37% -1.85% -0.23%

Earnings & Valuation

This table compares Diamond Hill Investment Group and B. Riley Financial’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Diamond Hill Investment Group $182.19 million 3.06 $74.20 million $17.97 10.00
B. Riley Financial $1.74 billion 0.81 $445.05 million ($1.73) -28.84

B. Riley Financial has higher revenue and earnings than Diamond Hill Investment Group. B. Riley Financial is trading at a lower price-to-earnings ratio than Diamond Hill Investment Group, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

63.9% of Diamond Hill Investment Group shares are owned by institutional investors. Comparatively, 58.0% of B. Riley Financial shares are owned by institutional investors. 3.5% of Diamond Hill Investment Group shares are owned by company insiders. Comparatively, 27.9% of B. Riley Financial shares are owned 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.

Dividends

Diamond Hill Investment Group pays an annual dividend of $6.00 per share and has a dividend yield of 3.3%. B. Riley Financial pays an annual dividend of $4.00 per share and has a dividend yield of 8.0%. Diamond Hill Investment Group pays out 33.4% of its earnings in the form of a dividend. B. Riley Financial pays out -231.2% 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. Diamond Hill Investment Group has raised its dividend for 1 consecutive years. B. Riley Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of recent ratings for Diamond Hill Investment Group and B. Riley Financial, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Diamond Hill Investment Group 0 0 0 0 N/A
B. Riley Financial 0 0 0 0 N/A

Summary

Diamond Hill Investment Group beats B. Riley Financial on 8 of the 14 factors compared between the two stocks.

About Diamond Hill Investment Group

(Get Rating)

Diamond Hill Investment Group, Inc., through its subsidiary, Diamond Hill Capital Management, Inc., provides investment advisory and fund administration services in the United States. It sponsors, distributes, and offers investment advisory and related services to its clients through pooled investment vehicles, including the Diamond Hill Funds, separately managed accounts, and model delivery programs. The company also provides fund administration services, including portfolio and regulatory compliance, treasury and financial oversight, and general business management and governance of the mutual fund complex, as well as oversight of back-office service providers, such as the custodian, fund accountant, and transfer agent. The company was founded in 1990 and is based in Columbus, Ohio.

About B. Riley Financial

(Get Rating)

B. Riley Financial, Inc., through its subsidiaries, provides investment banking and financial services to corporate, institutional, and high net worth clients in North America, Australia, and Europe. The company operates in six segments: Capital Markets, Wealth Management, Auction and Liquidation, Financial Consulting, Principal Investments-Communications, and Brands. The Capital Markets segments offers investment banking, corporate finance, financial advisory, research, securities lending and sales, and trading services; merger and acquisitions, restructuring advisory, initial and secondary public offerings, and institutional private placements services; asset management services; and trades in equity securities. The Wealth Management segment provides wealth management and tax services. The Auction and Liquidation Segment offers retail store liquidation, and wholesale and industrial assets disposition services. The Financial Consulting segment provides bankruptcy, forensic accounting, litigation support, operations management and real estate consulting, and valuation and appraisal services. The Principal Investments-Communications segment provides consumer Internet access through United Online under the NetZero and Juno brands; VoIP communication and related products, and subscription services through magicJack; and mobile phone services and devices through Marconi Wireless. The Brands segments provides licensing of a brand investment portfolio, including Catherine Malandrino, English Laundry, Joan Vass, Kensie Girl, Limited Too, and Nanette Lepore. It also offers advisory services; brokerage services; senior secured and second lien secured loans to middle market public and the private U.S. companies; and consulting services. The company was formerly known as Great American Group, Inc. and changed its name to B. Riley Financial, Inc. in November 2014. The company was founded in 1973 and is headquartered in Los Angeles, California.

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