The growth in second-quarter earnings at Motley Fool Inside Value selection Federated Investors (NYSE:FII) was powered by lower overall expenses and higher investment income rather than a robust increase in advisory fees. And so the market yawned.

But the company's stagnant share price is making Federated Investors a much more compelling investment relative to many of its sexier asset management rivals. At a recent price of $31, the stock changes hands at just 16 times trailing earnings. By comparison, T. Rowe Price (NASDAQ:TROW) is trading at 24 times earnings and Franklin Resources (NYSE:BEN) is trading at 20 times earnings.

To be sure, Federated's competitive strengths are not as obvious as other asset managers', who are having more success in attracting net inflows from investment management clients -- and those assets under management are an asset manager's raison d'etre. Moreover, assets under management at Federated Investors are concentrated in the company's money market products, which generate lower advisory fees than the equity products for which many other private and publicly traded peers are known.

Federated Investors has been making an effort to broaden its product offerings. It recently announced the acquisition of MDT Advisers, an equity manager that relies on quantitative models in the stock selection process. Federated Investors now manages approximately $36 billion in equity portfolios, with a total of $210 billion of assets under management. Still, Federated Investors remains known for the approximately $160 billion of money market funds it now manages.

Managing these funds is a slow-growth enterprise, but Federated's scale makes it a profitable franchise for the company. Much of that profitability was obscured in the second quarter by an increase in marketing costs related to the Alliance acquisition. As rising interest rates stabilize and Federated continues to consolidate its leading presence in money market funds, that profitability should become more visible to the stock market. If the market does not quickly recognize Federated's value, perhaps something will come from the speculation about a potential management buyout. In the meantime, investors might feel consoled by the stock's quarterly dividend, which was just increased to $0.18.

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Michael Leibert welcomes your feedback. He does not own shares in any of the companies mentioned in this article.