Waddell & Reed Financial (NYSE: WDR) and Apollo Global Management (NYSE:APO) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, earnings, analyst recommendations, dividends, profitability, institutional ownership and valuation.

Institutional and Insider Ownership

96.4% of Waddell & Reed Financial shares are held by institutional investors. Comparatively, 73.6% of Apollo Global Management shares are held by institutional investors. 3.8% of Waddell & Reed Financial shares are held by company insiders. Comparatively, 4.1% of Apollo Global Management shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Waddell & Reed Financial and Apollo Global Management’s 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 1.43 $241.86 million $1.59 12.56
Apollo Global Management $2.21 billion 2.67 $496.41 million $2.56 11.90

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

Dividends

Waddell & Reed Financial pays an annual dividend of $1.84 per share and has a dividend yield of 9.2%. Apollo Global Management pays an annual dividend of $2.08 per share and has a dividend yield of 6.8%. 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. Apollo Global Management pays out 81.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Waddell & Reed Financial has raised 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.

Risk & Volatility

Waddell & Reed Financial has a beta of 2.04, meaning that its share price is 104% more volatile than the S&P 500. Comparatively, Apollo Global Management has a beta of 1.2, meaning that its share price is 20% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Waddell & Reed Financial and Apollo Global Management, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Waddell & Reed Financial 5 2 0 0 1.29
Apollo Global Management 0 3 8 0 2.73

Waddell & Reed Financial currently has a consensus target price of $17.50, indicating a potential downside of 12.37%. Apollo Global Management has a consensus target price of $29.80, indicating a potential downside of 2.17%. Given Apollo Global Management’s stronger consensus rating and higher possible upside, analysts plainly believe Apollo Global Management is more favorable than Waddell & Reed Financial.

Profitability

This table compares Waddell & Reed Financial and Apollo Global Management’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%
Apollo Global Management 21.79% 59.61% 19.32%

Summary

Apollo Global Management beats Waddell & Reed Financial on 12 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.

Apollo Global Management Company Profile

Apollo Global Management, LLC (Apollo) is an alternative investment manager in private equity, credit and real estate. The Company raises, invests and manages funds on behalf of pension, endowment and sovereign wealth funds, as well as other institutional and individual investors. The Company’s segments include private equity, credit and real estate. The private equity segment invests in control equity and related debt instruments, convertible securities and distressed debt investments. The credit segment invests in non-control corporate and structured debt instruments, including performing, stressed and distressed investments across the capital structure. The real estate segment invests in real estate equity for the acquisition and recapitalization of real estate assets, portfolios, platforms and operating companies, and real estate debt, including first mortgage and mezzanine loans, preferred equity and commercial mortgage backed securities.

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