Financial Contrast: American Capital (ACAS) and Waddell & Reed Financial (WDR)
American Capital (NASDAQ: ACAS) and Waddell & Reed Financial (NYSE:WDR) are both financials companies, but which is the better business? We will compare the two companies based on the strength of their dividends, valuation, earnings, analyst recommendations, profitability, institutional ownership and risk.
This table compares American Capital and Waddell & Reed Financial’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%|
This is a breakdown of current recommendations and price targets for American Capital and Waddell & Reed Financial, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Waddell & Reed Financial||5||2||0||0||1.29|
Waddell & Reed Financial has a consensus price target of $17.50, suggesting a potential downside of 6.52%. Given Waddell & Reed Financial’s higher possible upside, analysts plainly believe Waddell & Reed Financial is more favorable than American Capital.
Volatility & Risk
American Capital has a beta of 1, suggesting that its share price has a similar volatility profile to the S&P 500.Comparatively, Waddell & Reed Financial has a beta of 2.06, suggesting that its share price is 106% more volatile than the S&P 500.
Institutional & Insider Ownership
65.7% of American Capital shares are owned by institutional investors. Comparatively, 96.4% of Waddell & Reed Financial shares are owned by institutional investors. 9.2% of American Capital shares are owned by company insiders. Comparatively, 3.8% of Waddell & Reed Financial shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
Valuation and Earnings
This table compares American Capital and Waddell & Reed Financial’s gross 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||$241.86 million||$1.59||11.77|
Waddell & Reed Financial has higher revenue and earnings than American Capital. American Capital 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.
Waddell & Reed Financial pays an annual dividend of $1.84 per share and has a dividend yield of 9.8%. American Capital does not pay a dividend. 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. Waddell & Reed Financial has increased its dividend for 6 consecutive years.
Waddell & Reed Financial beats American Capital on 9 of the 12 factors compared between the two stocks.
American Capital Company Profile
Acas LLC., formerly American Capital, Ltd. (American Capital) is a global asset manager and private equity firm. American Capital, both directly and through its asset management business, originates, underwrites and manages investments in middle market private equity, leveraged finance, real estate, energy and structured products. It primarily invests in senior and mezzanine debt and equity in buyouts of private companies sponsored by the Company (American Capital One Stop Buyouts) or sponsored by other private equity funds and provide capital directly to early-stage and mature private and small public companies (Sponsor Finance and Other Investments). It also invests in first and second lien floating rate loans to the United States-based companies (Senior Floating Rate Loans or SFRL) and structured finance investments (Structured Products), including collateralized loan obligation (CLO) securities and commercial mortgages, and commercial mortgage backed securities (CMBS).
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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