Waddell & Reed Financial (NYSE: WDR) and Virtu Financial (NASDAQ:VIRT) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their dividends, analyst recommendations, profitability, earnings, risk, institutional ownership and valuation.
Risk & Volatility
Waddell & Reed Financial has a beta of 1.92, meaning that its share price is 92% more volatile than the S&P 500. Comparatively, Virtu Financial has a beta of -0.65, meaning that its share price is 165% less volatile than the S&P 500.
Earnings and Valuation
This table compares Waddell & Reed Financial and Virtu Financial’s top-line revenue, earnings per share and valuation.
||Earnings Per Share
|Waddell & Reed Financial
Waddell & Reed Financial has higher revenue and earnings than Virtu Financial. Waddell & Reed Financial is trading at a lower price-to-earnings ratio than Virtu Financial, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
98.8% of Waddell & Reed Financial shares are held by institutional investors. Comparatively, 25.5% of Virtu Financial shares are held by institutional investors. 3.4% of Waddell & Reed Financial shares are held by company insiders. Comparatively, 73.5% of Virtu Financial shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
This table compares Waddell & Reed Financial and Virtu Financial’s net margins, return on equity and return on assets.
||Return on Equity
||Return on Assets
|Waddell & Reed Financial
Waddell & Reed Financial pays an annual dividend of $1.00 per share and has a dividend yield of 5.3%. Virtu Financial pays an annual dividend of $0.96 per share and has a dividend yield of 3.7%. Waddell & Reed Financial pays out 52.1% of its earnings in the form of a dividend. Virtu Financial pays out 168.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Waddell & Reed Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.
This is a summary of recent ratings and target prices for Waddell & Reed Financial and Virtu Financial, as reported by MarketBeat.com.
||Strong Buy Ratings
|Waddell & Reed Financial
Waddell & Reed Financial currently has a consensus price target of $20.29, suggesting a potential upside of 7.85%. Virtu Financial has a consensus price target of $34.75, suggesting a potential upside of 33.65%. Given Virtu Financial’s stronger consensus rating and higher possible upside, analysts clearly believe Virtu Financial is more favorable than Waddell & Reed Financial.
Waddell & Reed Financial beats Virtu Financial on 9 of the 16 factors compared between the two stocks.
About Waddell & Reed Financial
Waddell & Reed Financial, Inc., through its subsidiaries, provides investment management and advisory, investment product underwriting and distribution, and shareholder services administration to mutual funds, and institutional and separately managed accounts in the United States. The company acts as an investment adviser for institutional and other private investors, and provides sub advisory services to other investment companies; and underwrites and distributes registered open-end mutual fund portfolios. It also offers fee-based asset allocation investment advisory products to advisors channel customers; distributes business partners' variable annuity products, and retirement and life insurance products to advisors channel customers; and sells life insurance and disability products underwritten by various carriers. The company distributes investment products through its wholesale channel comprising other broker/dealers, various retirement platforms, and registered investment advisors, as well as through independent financial advisors; and markets investment advisory services to institutional investors directly or through consultants. Waddell & Reed Financial, Inc. was founded in 1937 and is based in Overland Park, Kansas.
About Virtu Financial
Virtu Financial, Inc., together with its subsidiaries, provides market making and liquidity services through its proprietary, multi-asset, and multi-currency technology platform to the financial markets worldwide. The company's Market Making segment principally consists of market making in the cash, futures, and options markets across equities, options, fixed income, currencies, and commodities. Its Execution Services segment comprises agency-based trading and trading venues, which offer execution services in equities, ETFs, futures, and fixed income to institutions, banks, and broker dealers. Virtu Financial, Inc. was founded in 2008 and is headquartered in New York, New York.
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