Comparing Waddell & Reed Financial (NYSE:WDR) and Safeguard Scientifics (SFE)

Safeguard Scientifics (NYSE: SFE) and Waddell & Reed Financial (NYSE:WDR) are both small-cap investment management & fund operators – nec companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, earnings, valuation, risk, analyst recommendations, profitability and institutional ownership.

Valuation & Earnings

This table compares Safeguard Scientifics and Waddell & Reed Financial’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Safeguard Scientifics N/A N/A -$22.26 million ($4.50) -2.78
Waddell & Reed Financial $1.16 billion 1.56 $146.90 million $1.48 14.71

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

Analyst Ratings

This is a summary of current ratings and price targets for Safeguard Scientifics and Waddell & Reed Financial, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Safeguard Scientifics 0 0 0 0 N/A
Waddell & Reed Financial 5 3 0 0 1.38

Safeguard Scientifics currently has a consensus target price of $13.25, indicating a potential upside of 6.00%. Waddell & Reed Financial has a consensus target price of $20.25, indicating a potential downside of 6.98%. Given Safeguard Scientifics’ higher probable upside, equities analysts plainly believe Safeguard Scientifics is more favorable than Waddell & Reed Financial.

Profitability

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

Net Margins Return on Equity Return on Assets
Safeguard Scientifics N/A -68.35% -43.20%
Waddell & Reed Financial 10.72% 16.72% 10.21%

Volatility and Risk

Safeguard Scientifics has a beta of 1.36, indicating that its share price is 36% more volatile than the S&P 500. Comparatively, Waddell & Reed Financial has a beta of 2, indicating that its share price is 100% more volatile than the S&P 500.

Insider & Institutional Ownership

76.4% of Safeguard Scientifics shares are held by institutional investors. Comparatively, 96.0% of Waddell & Reed Financial shares are held by institutional investors. 2.7% of Safeguard Scientifics shares are held by insiders. Comparatively, 3.8% of Waddell & Reed Financial shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Dividends

Waddell & Reed Financial pays an annual dividend of $1.00 per share and has a dividend yield of 4.6%. Safeguard Scientifics does not pay a dividend. Waddell & Reed Financial pays out 67.6% of its earnings in the form of a dividend.

Summary

Waddell & Reed Financial beats Safeguard Scientifics on 11 of the 13 factors compared between the two stocks.

Safeguard Scientifics Company Profile

Safeguard Scientifics, Inc. is engaged in providing capital to technology companies within the fields of healthcare, financial services and digital media. The Company holds interest in companies, which it refers to as partner companies. As of December 31, 2016, the Company held interests in 29 non-consolidated partner companies. The Company offers operational and management support to each of its partner companies. In addition to management and operational support, the Company offers ongoing planning and development assessment. It provides mentoring, advice and guidance to develop partner company management. The Company serves on the boards of directors of its partner companies, working with them to develop and implement strategic and operating plans. It measures and monitors achievement of these plans through regular review of operational and financial performance measurements.

Waddell & Reed Financial Company Profile

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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