Analyzing Nomura (NMR) & Waddell & Reed (WDR)

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

Volatility and Risk

Nomura has a beta of 1.7, indicating that its share price is 70% more volatile than the S&P 500. Comparatively, Waddell & Reed has a beta of 1.95, indicating that its share price is 95% more volatile than the S&P 500.

Dividends

Nomura pays an annual dividend of $0.07 per share and has a dividend yield of 1.3%. Waddell & Reed pays an annual dividend of $1.00 per share and has a dividend yield of 5.1%. Nomura pays out 12.3% of its earnings in the form of a dividend. Waddell & Reed pays out 52.1% 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.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Nomura $13.82 billion 1.36 $1.97 billion $0.57 9.61
Waddell & Reed $1.16 billion 1.38 $141.27 million $1.92 10.16

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

Analyst Ratings

This is a breakdown of recent recommendations for Nomura and Waddell & Reed, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nomura 0 0 3 0 3.00
Waddell & Reed 4 3 0 0 1.43

Waddell & Reed has a consensus price target of $20.29, suggesting a potential upside of 4.03%. Given Waddell & Reed’s higher probable upside, analysts clearly believe Waddell & Reed is more favorable than Nomura.

Insider and Institutional Ownership

0.8% of Nomura shares are owned by institutional investors. Comparatively, 97.4% of Waddell & Reed shares are owned by institutional investors. 3.4% of Waddell & Reed shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
Nomura 11.88% 7.62% 0.51%
Waddell & Reed 11.76% 17.97% 11.41%

Summary

Waddell & Reed beats Nomura on 10 of the 16 factors compared between the two stocks.

Nomura Company Profile

Nomura Holdings, Inc. provides various financial services to individuals, corporations, financial institutions, governments, and governmental agencies worldwide. It operates through three segments: Retail, Asset Management, and Wholesale. The Retail segment offers various financial products and investment services for individuals and corporations. As of March 31, 2017, this segment operated a network of 158 branches. The Asset Management segment is involved in the development and management of investment trusts, which offers low risk/low return products and high risk/high return products, as well as products for various investor needs; and provision of investment advisory services to public pension funds, private pension funds, governments and their agencies, central banks, and institutional investors. The Wholesale segment engages in the research, sale, trading, and market-making of fixed income and equity-related products. It is also involved in underwriting various securities and other financial instruments, which include various stocks, convertible and exchangeable securities, investment grade debts, sovereign and emerging market debts, high yield debt, structured securities, and other securities; arranging private placements, as well as other capital raising activities; and the provision of financial advisory services on business transactions, including mergers and acquisitions, divestitures, spin-offs, capital structuring, corporate defense activities, leveraged buyouts, and risk solutions. In addition, this segment offers various financial instruments, such as equity securities, debt securities, investment trusts, and variable annuity insurance products for the short, medium, and long-term. The company was formerly known as The Nomura Securities Co., Ltd. and changed its name to Nomura Holdings, Inc. in October 2001. Nomura Holdings, Inc. was founded in 1925 and is headquartered in Tokyo, Japan.

Waddell & Reed Company Profile

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.

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