T. Rowe Price Group (NASDAQ: TROW) and WisdomTree Investments (NASDAQ:WETF) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, dividends, profitability, earnings, institutional ownership, risk and analyst recommendations.

Valuation & Earnings

This table compares T. Rowe Price Group and WisdomTree Investments’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
T. Rowe Price Group $4.47 billion 4.92 $2.06 billion $5.82 15.71
WisdomTree Investments $212.91 million 6.65 $55.10 million $0.22 47.82

T. Rowe Price Group has higher revenue and earnings than WisdomTree Investments. T. Rowe Price Group is trading at a lower price-to-earnings ratio than WisdomTree Investments, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

T. Rowe Price Group has a beta of 1.25, meaning that its share price is 25% more volatile than the S&P 500. Comparatively, WisdomTree Investments has a beta of 3.15, meaning that its share price is 215% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and target prices for T. Rowe Price Group and WisdomTree Investments, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
T. Rowe Price Group 3 6 2 0 1.91
WisdomTree Investments 3 1 4 0 2.13

T. Rowe Price Group presently has a consensus price target of $84.11, indicating a potential downside of 7.98%. WisdomTree Investments has a consensus price target of $10.46, indicating a potential downside of 0.53%. Given WisdomTree Investments’ stronger consensus rating and higher probable upside, analysts plainly believe WisdomTree Investments is more favorable than T. Rowe Price Group.

Profitability

This table compares T. Rowe Price Group and WisdomTree Investments’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
T. Rowe Price Group 32.64% 24.38% 18.94%
WisdomTree Investments 13.33% 15.41% 12.78%

Dividends

T. Rowe Price Group pays an annual dividend of $2.28 per share and has a dividend yield of 2.5%. WisdomTree Investments pays an annual dividend of $0.32 per share and has a dividend yield of 3.0%. T. Rowe Price Group pays out 39.2% of its earnings in the form of a dividend. WisdomTree Investments pays out 145.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. T. Rowe Price Group has increased its dividend for 30 consecutive years.

Institutional & Insider Ownership

73.6% of T. Rowe Price Group shares are held by institutional investors. Comparatively, 92.5% of WisdomTree Investments shares are held by institutional investors. 3.6% of T. Rowe Price Group shares are held by company insiders. Comparatively, 16.6% of WisdomTree Investments shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Summary

WisdomTree Investments beats T. Rowe Price Group on 9 of the 17 factors compared between the two stocks.

T. Rowe Price Group Company Profile

T. Rowe Price Group, Inc. is a financial services holding company. The Company provides global investment management services through its subsidiaries to investors across the world. The Company provides an array of Company sponsored the United States mutual funds, other sponsored pooled investment vehicles, sub advisory services, separate account management, recordkeeping, and related services to individuals, advisors, institutions, financial intermediaries and retirement plan sponsors. The Company distributes its products in countries located within three geographical regions: North America, Europe Middle East and Africa (EMEA), and Asia Pacific (APAC). It also offers specialized advisory services, including management of stable value investment contracts and a distribution management service for the disposition of equity securities its clients receive from third-party venture capital investment pools. As of December 31, 2016, it serviced clients in 45 countries across the world.

WisdomTree Investments Company Profile

WisdomTree Investments, Inc. is an asset management company that focuses on exchange-traded funds (ETFs). The Company’s family of ETFs includes funds that track its own indexes, funds that track third party indexes and actively managed funds. It operates as an exchange traded products sponsor and asset manager providing investment advisory services in the United States, Europe, Canada and Japan. These activities are reported in its U.S. Business segment that comprises its the United States business and Japan sales office, which primarily engages in selling its United States listed ETFs to Japanese institutions, and International Business segment, that comprises its European business and Canadian business. Its United States listed products include International Hedged Equity ETFs, Equity ETFs, Fixed Income ETFs, Currency ETFs, Alternative Strategy ETFs and Commodity ETFs. Its portfolio of Non-the United States listed products include WisdomTree UCITS ETFs, Boost ETPs and Canadian ETFs.

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