Waddell & Reed Financial (NYSE: WDR) and Ameriprise Financial Services (NYSE:AMP) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, risk, profitability, dividends, valuation, analyst recommendations and institutional ownership.

Risk and Volatility

Waddell & Reed Financial has a beta of 2.06, suggesting that its share price is 106% more volatile than the S&P 500. Comparatively, Ameriprise Financial Services has a beta of 1.86, suggesting that its share price is 86% more volatile than the S&P 500.

Profitability

This table compares Waddell & Reed Financial and Ameriprise Financial Services’ 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%
Ameriprise Financial Services 11.81% 26.54% 1.20%

Dividends

Waddell & Reed Financial pays an annual dividend of $1.84 per share and has a dividend yield of 9.9%. Ameriprise Financial Services pays an annual dividend of $3.32 per share and has a dividend yield of 2.4%. 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. Ameriprise Financial Services pays out 37.8% of its earnings in the form of a dividend. Waddell & Reed Financial has increased its dividend for 7 consecutive years and Ameriprise Financial Services has increased its dividend for 6 consecutive years. Waddell & Reed Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares Waddell & Reed Financial and Ameriprise Financial Services’ 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 1.33 $241.86 million $1.59 11.74
Ameriprise Financial Services $12.00 billion 1.71 $2.90 billion $8.78 15.55

Ameriprise Financial Services has higher revenue and earnings than Waddell & Reed Financial. Waddell & Reed Financial is trading at a lower price-to-earnings ratio than Ameriprise Financial Services, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

96.4% of Waddell & Reed Financial shares are owned by institutional investors. Comparatively, 79.6% of Ameriprise Financial Services shares are owned by institutional investors. 3.8% of Waddell & Reed Financial shares are owned by company insiders. Comparatively, 1.5% of Ameriprise Financial Services shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent recommendations for Waddell & Reed Financial and Ameriprise Financial Services, 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
Ameriprise Financial Services 1 4 4 0 2.33

Waddell & Reed Financial presently has a consensus price target of $17.50, suggesting a potential downside of 6.22%. Ameriprise Financial Services has a consensus price target of $145.85, suggesting a potential upside of 6.82%. Given Ameriprise Financial Services’ stronger consensus rating and higher probable upside, analysts clearly believe Ameriprise Financial Services is more favorable than Waddell & Reed Financial.

Summary

Ameriprise Financial Services beats Waddell & Reed Financial on 11 of the 17 factors compared between the two stocks.

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.

Ameriprise Financial Services Company Profile

Ameriprise Financial, Inc. is a financial services company that offers financial solutions to individual and institutional clients. The Company operates in five segments: Advice & Wealth Management; Asset Management; Annuities; Protection, and Corporate & Other. The Company uses Ameriprise Financial as its enterprise brand, as well as the name of its advisor network and certain of its retail products and services. The retail products and services that use the Ameriprise Financial brand include those that it provides through its advisors (financial planning, investment advisory accounts and retail brokerage services) and products and services that the Company markets directly to consumers or through affinity groups (personal auto and home insurance). The Company uses its RiverSource brand for its annuity and protection products issued by the RiverSource Life companies, including its life and disability income insurance products.

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