The Charles Schwab Corporation (NYSE: SCHW) and Nomura Holdings Inc ADR (NYSE:NMR) are both large-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, profitability, risk, analyst recommendations, institutional ownership, dividends and earnings.

Dividends

The Charles Schwab Corporation pays an annual dividend of $0.32 per share and has a dividend yield of 0.8%. Nomura Holdings Inc ADR pays an annual dividend of $0.07 per share and has a dividend yield of 1.3%. The Charles Schwab Corporation pays out 21.5% of its earnings in the form of a dividend. Nomura Holdings Inc ADR pays out 11.1% 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. Nomura Holdings Inc ADR is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares The Charles Schwab Corporation and Nomura Holdings Inc ADR’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
The Charles Schwab Corporation $8.08 billion 6.56 $2.00 billion $1.49 26.56
Nomura Holdings Inc ADR $12.98 billion 1.51 $2.23 billion $0.63 8.79

Nomura Holdings Inc ADR has higher revenue and earnings than The Charles Schwab Corporation. Nomura Holdings Inc ADR is trading at a lower price-to-earnings ratio than The Charles Schwab Corporation, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares The Charles Schwab Corporation and Nomura Holdings Inc ADR’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
The Charles Schwab Corporation 26.73% 15.41% 0.98%
Nomura Holdings Inc ADR 15.47% 8.69% 0.57%

Risk and Volatility

The Charles Schwab Corporation has a beta of 1.63, indicating that its share price is 63% more volatile than the S&P 500. Comparatively, Nomura Holdings Inc ADR has a beta of 1.56, indicating that its share price is 56% more volatile than the S&P 500.

Institutional & Insider Ownership

79.6% of The Charles Schwab Corporation shares are owned by institutional investors. Comparatively, 0.6% of Nomura Holdings Inc ADR shares are owned by institutional investors. 12.0% of The Charles Schwab Corporation shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for The Charles Schwab Corporation and Nomura Holdings Inc ADR, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The Charles Schwab Corporation 0 6 10 0 2.63
Nomura Holdings Inc ADR 0 3 1 0 2.25

The Charles Schwab Corporation presently has a consensus target price of $44.27, indicating a potential upside of 11.87%. Given The Charles Schwab Corporation’s stronger consensus rating and higher probable upside, research analysts plainly believe The Charles Schwab Corporation is more favorable than Nomura Holdings Inc ADR.

Summary

The Charles Schwab Corporation beats Nomura Holdings Inc ADR on 12 of the 16 factors compared between the two stocks.

About The Charles Schwab Corporation

The Charles Schwab Corporation (CSC) is a savings and loan holding company. The Company, through its subsidiaries, engages in wealth management, securities brokerage, banking, money management and financial advisory services. The Company provides financial services to individuals and institutional clients through two segments: Investor Services and Advisor Services. The Investor Services segment provides retail brokerage and banking services, retirement plan services and other corporate brokerage services. The Advisor Services segment provides custodial, trading, and support services as well as retirement business services. The Company offers a range of products to address individuals’ varying investment and financial needs. Its product offerings include brokerage, mutual funds, ETFs, advice solutions, banking and trust. Brokerage provides a range of brokerage accounts with cash management capabilities. Mutual funds offer third-party mutual funds through the Mutual Fund Marketplace.

About Nomura Holdings Inc ADR

Nomura Holdings, Inc. (Nomura) is a financial services company. The Company, through its broker-dealer, banking and other financial services subsidiaries, provide investment, financing and related services to individual, institutional and government clients across the world. The Company’s segments include Retail, Asset Management and Wholesale. Its clients include individuals, corporations, financial institutions, governments and governmental agencies. The Company’s Retail segment provides investment consultation services to individual clients in Japan. The Company’s Asset Management segment develops and manages investment trusts, and provides investment advisory services. The Company’s Wholesale segment is engaged in the sales and trading of debt and equity securities, derivatives, and currencies on a global basis, and provides investment banking services, such as the underwriting of debt and equity securities, as well as mergers and acquisitions and financial advice.

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