Head to Head Comparison: Noah Holdings (NOAH) and Waddell & Reed Financial (WDR)

Noah Holdings (NYSE: NOAH) and Waddell & Reed Financial (NYSE:WDR) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, dividends, profitability, analyst recommendations, valuation, earnings and institutional ownership.

Profitability

This table compares Noah Holdings and Waddell & Reed Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Noah Holdings 29.39% 18.42% 11.94%
Waddell & Reed Financial 10.10% 16.81% 10.22%

Dividends

Waddell & Reed Financial pays an annual dividend of $1.84 per share and has a dividend yield of 9.5%. Noah Holdings does not pay a dividend. Waddell & Reed Financial pays out 132.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Noah Holdings has increased its dividend for 6 consecutive years.

Earnings and Valuation

This table compares Noah Holdings and Waddell & Reed Financial’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Noah Holdings $362.03 million 6.17 $92.73 million $1.73 22.82
Waddell & Reed Financial $1.24 billion 1.30 $146.90 million $1.39 13.95

Waddell & Reed Financial has higher revenue and earnings than Noah Holdings. Waddell & Reed Financial is trading at a lower price-to-earnings ratio than Noah Holdings, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Noah Holdings has a beta of 2.6, indicating that its stock price is 160% more volatile than the S&P 500. Comparatively, Waddell & Reed Financial has a beta of 2.09, indicating that its stock price is 109% more volatile than the S&P 500.

Insider & Institutional Ownership

41.3% of Noah Holdings shares are owned by institutional investors. Comparatively, 96.7% of Waddell & Reed Financial shares are owned by institutional investors. 3.8% of Waddell & Reed Financial shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations for Noah Holdings and Waddell & Reed Financial, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Noah Holdings 0 0 0 0 N/A
Waddell & Reed Financial 5 2 0 0 1.29

Waddell & Reed Financial has a consensus price target of $18.43, indicating a potential downside of 4.96%. Given Waddell & Reed Financial’s higher possible upside, analysts clearly believe Waddell & Reed Financial is more favorable than Noah Holdings.

Summary

Noah Holdings beats Waddell & Reed Financial on 9 of the 15 factors compared between the two stocks.

About Noah Holdings

Noah Holdings Limited is a wealth management service provider with a focus on global wealth investment and asset allocation services for high net worth individuals and enterprises in China. The Company operates through three segments: wealth management, asset management and Internet finance. It also provides Internet finance services to clients in China. It provides direct access to China’s high net worth population. With approximately 1,100 relationship managers in over 130 branch offices, its coverage network includes China’s regions where high net worth population is concentrated, including the Yangtze River Delta, the Pearl River Delta, the Bohai Rim and other regions. Its product offerings consist primarily of over-the-counter (OTC) wealth management and OTC asset management products, mutual fund products and asset management plans originated in China and designed to cater to the needs of China’s high net worth population.

About Waddell & Reed Financial

Waddell & Reed Financial, Inc., incorporated on December 24, 1981, is a holding company. The Company is a mutual fund and asset management company. The Company provides investment management, investment advisory, investment product underwriting, and distribution and shareholder services administration to Waddell & Reed Advisors group of mutual funds (the Advisors Funds), Ivy Funds, Ivy Funds Variable Insurance Portfolios (Ivy Funds VIP), InvestEd Portfolios and 529 college savings plan (collectively, the Funds), and the Ivy Global Investors Fund SICAV (the SICAV) and its Ivy Global Investors sub-funds (the IGI Funds), and institutional and separately managed accounts. The Company operates its business through a distribution network. Its retail products are distributed through third parties, such as other broker-dealers, registered investment advisors and various retirement platforms or through associated independent contractor financial advisors.

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