Reviewing BlackRock (NYSE:BLK) and State Street Corporation (STT)

BlackRock (NYSE: BLK) and State Street Corporation (NYSE:STT) are both large-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their profitabiliy, valuation, earnings, institutional ownership, analyst recommendations, risk and dividends.

Analyst Recommendations

This is a breakdown of current ratings and target prices for BlackRock and State Street Corporation, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
BlackRock	0	5	7	0	2.58
State Street Corporation	2	9	2	1	2.14

BlackRock currently has a consensus target price of $436.00, indicating a potential upside of 1.40%. State Street Corporation has a consensus target price of $88.38, indicating a potential downside of 5.57%. Given BlackRock’s stronger consensus rating and higher probable upside, equities research analysts plainly believe BlackRock is more favorable than State Street Corporation.

Risk & Volatility

BlackRock has a beta of 1.71, meaning that its stock price is 71% more volatile than the S&P 500. Comparatively, State Street Corporation has a beta of 1.29, meaning that its stock price is 29% more volatile than the S&P 500.

Insider & Institutional Ownership

80.8% of BlackRock shares are owned by institutional investors. Comparatively, 87.7% of State Street Corporation shares are owned by institutional investors. 1.9% of BlackRock shares are owned by company insiders. Comparatively, 0.6% of State Street Corporation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Dividends

BlackRock pays an annual dividend of $10.00 per share and has a dividend yield of 2.3%. State Street Corporation pays an annual dividend of $1.52 per share and has a dividend yield of 1.6%. BlackRock pays out 48.0% of its earnings in the form of a dividend. State Street Corporation pays out 28.1% 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. BlackRock has raised its dividend for 7 consecutive years and State Street Corporation has raised its dividend for 6 consecutive years. BlackRock is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares BlackRock and State Street Corporation’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
BlackRock	29.92%	11.79%	1.52%
State Street Corporation	19.97%	12.49%	0.95%

Valuation & Earnings

This table compares BlackRock and State Street Corporation’s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
BlackRock	$11.52 billion	6.05	$5.05 billion	$20.84	20.63
State Street Corporation	$10.63 billion	3.29	$2.02 billion	$5.40	17.33

BlackRock has higher revenue and earnings than State Street Corporation. State Street Corporation 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 State Street Corporation on 14 of the 18 factors compared between the two stocks.

BlackRock Company Profile

BlackRock, Inc. (BlackRock) is an investment management company. BlackRock provides a range of investment and risk management services to institutional and retail clients worldwide. Its diverse platform of active (alpha) and index (beta) investment strategies across asset classes enables the Company to tailor investment outcomes and asset allocation solutions for clients. Its product offerings include single- and multi-asset portfolios investing in equities, fixed income, alternatives and money market instruments. Its products are offered directly and through intermediaries in a range of vehicles, including open-end and closed-end mutual funds, iShares exchange-traded funds (ETFs), separate accounts, collective investment funds and other pooled investment vehicles. It offers its Aladdin investment system, as well as risk management, outsourcing, advisory and technology services, to institutional investors and wealth management intermediaries under the BlackRock Solutions name.

State Street Corporation Company Profile

State Street Corporation is a financial holding company. The Company operates through two lines of business: Investment Servicing and Investment Management. The Company, through its subsidiary, State Street Bank and Trust Company (State Street Bank), provides a range of financial products and services to institutional investors across the world. Investment servicing line of business performs functions, such as providing institutional investors with clearing, settlement and payment services. The Company operates investment management line of business through State Street Global Advisors (SSGA). SSGA provides a range of investment management, investment research and investment advisory services to corporations, public funds and other investors. Its clients include mutual funds, collective investment funds and other investment pools, corporate and public retirement plans, insurance companies, foundations, endowments and investment managers.