Noah Holdings (NYSE: NOAH) and Arlington Asset Investment Corp (NYSE:AI) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, profitability, earnings, valuation, risk and dividends.

Profitability

This table compares Noah Holdings and Arlington Asset Investment Corp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Noah Holdings 29.39% 18.42% 11.94%
Arlington Asset Investment Corp -33.84% -10.44% -0.93%

Institutional and Insider Ownership

41.5% of Noah Holdings shares are held by institutional investors. Comparatively, 38.6% of Arlington Asset Investment Corp shares are held by institutional investors. 5.9% of Arlington Asset Investment Corp shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Volatility and Risk

Noah Holdings has a beta of 2.44, meaning that its stock price is 144% more volatile than the S&P 500. Comparatively, Arlington Asset Investment Corp has a beta of 1.12, meaning that its stock price is 12% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Noah Holdings and Arlington Asset Investment Corp, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Noah Holdings 0 0 1 0 3.00
Arlington Asset Investment Corp 0 2 2 0 2.50

Noah Holdings currently has a consensus target price of $29.00, indicating a potential downside of 25.91%. Arlington Asset Investment Corp has a consensus target price of $14.94, indicating a potential upside of 17.07%. Given Arlington Asset Investment Corp’s higher probable upside, analysts plainly believe Arlington Asset Investment Corp is more favorable than Noah Holdings.

Dividends

Arlington Asset Investment Corp pays an annual dividend of $2.20 per share and has a dividend yield of 17.2%. Noah Holdings does not pay a dividend. Arlington Asset Investment Corp pays out -146.7% of its earnings in the form of a dividend.

Earnings & Valuation

This table compares Noah Holdings and Arlington Asset Investment Corp’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Noah Holdings $409.59 million 3.79 $122.75 million $1.73 22.62
Arlington Asset Investment Corp $45.40 million 7.29 -$38.93 million ($1.50) -8.51

Noah Holdings has higher revenue and earnings than Arlington Asset Investment Corp. Arlington Asset Investment Corp is trading at a lower price-to-earnings ratio than Noah Holdings, indicating that it is currently the more affordable of the two stocks.

Summary

Noah Holdings beats Arlington Asset Investment Corp on 9 of the 15 factors compared between the two stocks.

About Noah Holdings

Noah Holdings Limited is a wealth management service provider with a focus on global wealth investment and asset allocation services for high net worth individuals and enterprises in China. The Company operates through three segments: wealth management, asset management and Internet finance. It also provides Internet finance services to clients in China. It provides direct access to China’s high net worth population. With approximately 1,100 relationship managers in over 130 branch offices, its coverage network includes China’s regions where high net worth population is concentrated, including the Yangtze River Delta, the Pearl River Delta, the Bohai Rim and other regions. Its product offerings consist primarily of over-the-counter (OTC) wealth management and OTC asset management products, mutual fund products and asset management plans originated in China and designed to cater to the needs of China’s high net worth population.

About Arlington Asset Investment Corp

Arlington Asset Investment Corp. is an investment company. The Company focuses on acquiring and holding a levered portfolio of residential mortgage-backed securities (MBS), consisting of agency MBS and private-label MBS. Agency MBS include residential mortgage pass-through certificates for which the principal and interest payments are guaranteed by a United States Government agency or government-sponsored enterprise (GSE), such as the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). Private-label MBS, or non-agency MBS, include residential MBS that are not guaranteed by a GSE or the United States Government. The Company funds its investments primarily through short-term financing arrangements. The Company purchases agency MBS either in initial offerings or in the secondary market through broker-dealers or similar entities. It may invest in agency MBS collateralized by adjustable-rate mortgage loans (ARMs) or hybrid ARMs.

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