Comparing Piper Sandler Companies (NYSE:PIPR) and Moody’s (NYSE:MCO)

Moody’s (NYSE:MCO) and Piper Sandler Companies (NYSE:PIPR) 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.

Profitability

This table compares Moody’s and Piper Sandler Companies’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Moody’s	34.25%	80.35%	19.38%
Piper Sandler Companies	14.51%	21.92%	14.60%

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Moody’s and Piper Sandler Companies, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Moody’s	0	7	13	0	2.65
Piper Sandler Companies	2	1	3	0	2.17

Moody’s presently has a consensus price target of $551.26, suggesting a potential upside of 13.73%. Piper Sandler Companies has a consensus price target of $90.81, suggesting a potential upside of 40.40%. Given Piper Sandler Companies’ higher possible upside, analysts plainly believe Piper Sandler Companies is more favorable than Moody’s.

Institutional & Insider Ownership

92.1% of Moody’s shares are owned by institutional investors. Comparatively, 72.8% of Piper Sandler Companies shares are owned by institutional investors. 0.1% of Moody’s shares are owned by company insiders. Comparatively, 3.1% of Piper Sandler Companies 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.

Volatility and Risk

Moody’s has a beta of 1.35, suggesting that its share price is 35% more volatile than the S&P 500. Comparatively, Piper Sandler Companies has a beta of 1.43, suggesting that its share price is 43% more volatile than the S&P 500.

Valuation & Earnings

This table compares Moody’s and Piper Sandler Companies”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Moody’s	$7.72 billion	10.88	$2.46 billion	$15.77	30.74
Piper Sandler Companies	$1.90 billion	2.40	$281.33 million	$4.32	14.97

Moody’s has higher revenue and earnings than Piper Sandler Companies. Piper Sandler Companies is trading at a lower price-to-earnings ratio than Moody’s, indicating that it is currently the more affordable of the two stocks.

Dividends

Moody’s pays an annual dividend of $4.12 per share and has a dividend yield of 0.8%. Piper Sandler Companies pays an annual dividend of $0.80 per share and has a dividend yield of 1.2%. Moody’s pays out 26.1% of its earnings in the form of a dividend. Piper Sandler Companies pays out 18.5% 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. Moody’s has increased its dividend for 16 consecutive years and Piper Sandler Companies has increased its dividend for 1 consecutive years. Piper Sandler Companies is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Moody’s beats Piper Sandler Companies on 12 of the 17 factors compared between the two stocks.

About Moody’s

Moody’s Corporation operates as an integrated risk assessment firm worldwide. It operates in two segments, Moody’s Analytics and Moody’s Investors Services. The Moody’s Analytics segment develops a range of products and services that support the risk management activities of institutional participants in financial markets. It also offers credit research, credit models and analytics, economics data and models, and structured finance solutions; data sets on companies and securities; and SaaS solutions supporting banking, insurance, and know your customer workflows. The Moody’s Investors Service segment publishes credit ratings and provides assessment services on various debt obligations, programs and facilities, and entities that issue such obligations, such as various corporate, financial institution, and governmental obligations, as well as structured finance securities. The company was formerly known as Dun and Bradstreet Company and changed its name to Moody’s Corporation in September 2000. Moody’s Corporation was founded in 1900 and is headquartered in New York, New York.

About Piper Sandler Companies

Piper Sandler Companies operates as an investment bank and institutional securities firm that serves corporations, private equity groups, public entities, non-profit entities, and institutional investors in the United States and internationally. The company offers investment banking and institutional sales, trading, and research services for various equity and fixed income products. It provides advisory services, such as mergers and acquisitions, equity private placements, and debt and restructuring advisory; raises capital through equity and debt financings; underwrites municipal issuances; and offers municipal financial advisory and loan placement services, as well as various over-the-counter derivative products. The company also offers public finance investment banking services that focus on state and local governments, and cultural and social service non-profit entities, as well as the education, healthcare, hospitality, senior living, and transportation sectors. In addition, it provides equity and fixed income advisory and trade execution services for institutional investors, and government and non-profit entities. Further, the company is involved in the alternative asset management funds merchant banking and healthcare to invest firm capital and to manage capital from outside investors, as well as trading activities. The company was formerly known as Piper Jaffray Companies and changed its name to Piper Sandler Companies in January 2020. Piper Sandler Companies was founded in 1895 and is headquartered in Minneapolis, Minnesota.