Legg Mason (NYSE: LM) and Waddell & Reed Financial (NYSE:WDR) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, valuation, risk, dividends, institutional ownership, profitability and analyst recommendations.
Legg Mason pays an annual dividend of $1.12 per share and has a dividend yield of 2.9%. Waddell & Reed Financial pays an annual dividend of $1.84 per share and has a dividend yield of 9.2%. Legg Mason pays out 46.5% of its earnings in the form of 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. Legg Mason has increased its dividend for 7 consecutive years and Waddell & Reed Financial has increased its dividend for 6 consecutive years.
Earnings & Valuation
This table compares Legg Mason and Waddell & Reed Financial’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Legg Mason||$2.98 billion||1.21||$572.31 million||$2.41||15.93|
|Waddell & Reed Financial||$1.17 billion||1.43||$241.86 million||$1.59||12.56|
Legg Mason has higher revenue and earnings than Waddell & Reed Financial. Waddell & Reed Financial is trading at a lower price-to-earnings ratio than Legg Mason, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
Legg Mason has a beta of 2.22, meaning that its stock price is 122% more volatile than the S&P 500. Comparatively, Waddell & Reed Financial has a beta of 2.04, meaning that its stock price is 104% more volatile than the S&P 500.
This is a breakdown of current recommendations and price targets for Legg Mason 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|
Legg Mason currently has a consensus target price of $42.75, suggesting a potential upside of 11.36%. Waddell & Reed Financial has a consensus target price of $17.50, suggesting a potential downside of 12.37%. Given Legg Mason’s stronger consensus rating and higher probable upside, equities analysts clearly believe Legg Mason is more favorable than Waddell & Reed Financial.
This table compares Legg Mason 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%|
Insider & Institutional Ownership
82.3% of Legg Mason shares are owned by institutional investors. Comparatively, 96.4% of Waddell & Reed Financial shares are owned by institutional investors. 12.7% of Legg Mason 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 endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Legg Mason beats Waddell & Reed Financial on 11 of the 17 factors compared between the two stocks.
About Legg Mason
Legg Mason, Inc. is a holding company. The Company and its subsidiaries are principally engaged in providing asset management and related financial services to individuals, institutions, corporations and municipalities. The Company operates through Global Asset Management segment. Global Asset Management provides investment advisory services to institutional and individual clients and to the Company-sponsored investment funds. The Company, through its subsidiaries, provides investment management and related services to institutional and individual clients, Company-sponsored investment funds and retail separately managed account programs. It offers its products and services directly and through various financial intermediaries. It has operations principally in the United States and the United Kingdom and also has offices in Australia, Bahamas, Brazil, Canada, Chile, China, Dubai, France, Germany, Italy, Japan, Luxembourg, Poland, Singapore, Spain, Switzerland and Taiwan.
About Waddell & Reed Financial
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.
Receive News & Ratings for Legg Mason Inc. Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Legg Mason Inc. and related companies with our FREE daily email newsletter.