Financial Review: Waddell & Reed Financial (WDR) and Fortress Investment Group (NYSE:FIG)
Waddell & Reed Financial (NYSE: WDR) and Fortress Investment Group (NYSE:FIG) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their dividends, analyst recommendations, earnings, profitabiliy, valuation, risk and institutional ownership.
This table compares Waddell & Reed Financial and Fortress Investment Group’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Waddell & Reed Financial||11.34%||18.75%||11.31%|
|Fortress Investment Group||10.61%||38.79%||15.58%|
This is a breakdown of current ratings and target prices for Waddell & Reed Financial and Fortress Investment Group, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Waddell & Reed Financial||5||2||0||0||1.29|
|Fortress Investment Group||0||4||0||0||2.00|
Waddell & Reed Financial presently has a consensus price target of $17.21, suggesting a potential downside of 8.24%. Fortress Investment Group has a consensus price target of $6.00, suggesting a potential downside of 25.00%. Given Waddell & Reed Financial’s higher possible upside, equities analysts plainly believe Waddell & Reed Financial is more favorable than Fortress Investment Group.
Volatility & Risk
Waddell & Reed Financial has a beta of 2.04, indicating that its share price is 104% more volatile than the S&P 500. Comparatively, Fortress Investment Group has a beta of 1.95, indicating that its share price is 95% more volatile than the S&P 500.
Institutional and Insider Ownership
94.0% of Waddell & Reed Financial shares are owned by institutional investors. Comparatively, 43.5% of Fortress Investment Group shares are owned by institutional investors. 3.8% of Waddell & Reed Financial shares are owned by insiders. Comparatively, 45.2% of Fortress Investment Group shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
Valuation & Earnings
This table compares Waddell & Reed Financial and Fortress Investment Group’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Waddell & Reed Financial||$1.17 billion||1.34||$251.46 million||$1.59||11.80|
|Fortress Investment Group||$950.66 million||1.85||$273.52 million||$0.44||18.18|
Fortress Investment Group has higher revenue, but lower earnings than Waddell & Reed Financial. Waddell & Reed Financial is trading at a lower price-to-earnings ratio than Fortress Investment Group, indicating that it is currently the more affordable of the two stocks.
Waddell & Reed Financial pays an annual dividend of $1.84 per share and has a dividend yield of 9.8%. Fortress Investment Group pays an annual dividend of $0.36 per share and has a dividend yield of 4.5%. Waddell & Reed Financial pays out 115.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Fortress Investment Group pays out 81.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Fortress Investment Group has increased its dividend for 6 consecutive years.
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.
Fortress Investment Group Company Profile
Fortress Investment Group LLC (Fortress) is an investment management firm. The Company operates through segments, including private equity funds, permanent capital vehicles, credit hedge funds, credit PE funds, liquid hedge funds and Logan Circle. Its business is to sponsor the formation of, and provide investment management services for, various investment funds, permanent capital vehicles and related managed accounts (the Fortress Funds). Fortress’s sources of income from the Fortress Funds are management fees, incentive income and investment income on its investments in the funds. As of December 31, 2016, the Company’s private equity business manages approximately $13.5 billion of assets under management (AUM); credit funds business manages approximately $18.1 billion of AUM; liquid hedge funds business manages over $4.6 billion of AUM, and Logan Circle business manages approximately $33.4 billion of AUM.
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