Contrasting Moody’s (NYSE:MCO) and Daiwa Securities Group (OTCMKTS:DSEEY)

Daiwa Securities Group (OTCMKTS:DSEEY) and Moody’s (NYSE:MCO) are both large-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their risk, analyst recommendations, valuation, profitability, earnings, institutional ownership and dividends.

Institutional & Insider Ownership

92.1% of Moody’s shares are owned by institutional investors. 0.1% of Moody’s shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Daiwa Securities Group and Moody’s’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Daiwa Securities Group	11.23%	7.00%	0.37%
Moody’s	29.92%	63.58%	16.34%

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Daiwa Securities Group and Moody’s, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Daiwa Securities Group	0	0	0	0	0.00
Moody’s	0	5	13	1	2.79

Moody’s has a consensus price target of $560.94, suggesting a potential upside of 8.84%. Given Moody’s’ stronger consensus rating and higher possible upside, analysts plainly believe Moody’s is more favorable than Daiwa Securities Group.

Dividends

Daiwa Securities Group pays an annual dividend of $0.26 per share and has a dividend yield of 2.7%. Moody’s pays an annual dividend of $3.76 per share and has a dividend yield of 0.7%. Daiwa Securities Group pays out 35.6% of its earnings in the form of a dividend. Moody’s pays out 30.2% 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. Moody’s has increased its dividend for 16 consecutive years.

Risk & Volatility

Daiwa Securities Group has a beta of 0.51, suggesting that its stock price is 49% less volatile than the S&P 500. Comparatively, Moody’s has a beta of 1.45, suggesting that its stock price is 45% more volatile than the S&P 500.

Valuation & Earnings

This table compares Daiwa Securities Group and Moody’s”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Daiwa Securities Group	$9.01 billion	1.53	$1.02 billion	$0.73	13.36
Moody’s	$7.09 billion	12.97	$2.06 billion	$12.44	41.43

Moody’s has lower revenue, but higher earnings than Daiwa Securities Group. Daiwa Securities Group is trading at a lower price-to-earnings ratio than Moody’s, indicating that it is currently the more affordable of the two stocks.

Summary

Moody’s beats Daiwa Securities Group on 16 of the 18 factors compared between the two stocks.

About Daiwa Securities Group

Daiwa Securities Group Inc., together with its subsidiaries, primarily operates as a securities broker-dealer in Japan and internationally. The company operates through four segments: Retail, Wholesale, Asset Management, and Investment. The Retail segment offers products and services related to asset management, including equities, bonds, investment trusts, wrap account services, insurance, banking services, inheritance-related services, etc. for individual investors and unlisted companies. The Wholesale segment offers sales and trading services of equities and bonds, as well as of foreign exchange and derivative products primarily for institutional investors and corporations; and investment banking services, such as underwriting of securities, M&A advisory, etc. The Asset Management segment structures and manages investment trusts primarily for individual investors and financial institutions; provides investment advisory services; and manages assets. The Investment segment invests in monetary claims, loans, private equities, and real estate properties, as well as energy, infrastructure, and resource sectors. The company also offers research and consulting, and information services, as well as engages in the office work activities. In addition, it is involved in the securities-related, investment advisory and agency, and investment management businesses, as well as lending and borrowing of real estate properties. The company was formerly known as Daiwa Securities Co. Ltd. and changed its name to Daiwa Securities Group Inc. in 1999. Daiwa Securities Group Inc. was founded in 1902 and is headquartered in Tokyo, Japan.

About Moody’s

Moody’s Corporation operates as an integrated risk assessment firm worldwide. It operates in two segments, Moody’s Analytics and Moody’s Investors Services. The Moody’s Analytics segment develops a range of products and services that support the risk management activities of institutional participants in financial markets. It also offers credit research, credit models and analytics, economics data and models, and structured finance solutions; data sets on companies and securities; and SaaS solutions supporting banking, insurance, and know your customer workflows. The Moody’s Investors Service segment publishes credit ratings and provides assessment services on various debt obligations, programs and facilities, and entities that issue such obligations, such as various corporate, financial institution, and governmental obligations, as well as structured finance securities. The company was formerly known as Dun and Bradstreet Company and changed its name to Moody’s Corporation in September 2000. Moody’s Corporation was founded in 1900 and is headquartered in New York, New York.