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

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 -27.20% -8.45% -0.71%

Insider and Institutional Ownership

41.5% of Noah Holdings shares are owned by institutional investors. Comparatively, 38.6% of Arlington Asset Investment Corp shares are owned by institutional investors. 5.9% of Arlington Asset Investment Corp shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Dividends

Arlington Asset Investment Corp pays an annual dividend of $2.20 per share and has a dividend yield of 19.1%. Noah Holdings does not pay a dividend. Arlington Asset Investment Corp pays out -150.7% of its earnings in the form of a dividend.

Risk & Volatility

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

Analyst Ratings

This is a summary of current recommendations and price targets 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, suggesting a potential downside of 25.12%. Arlington Asset Investment Corp has a consensus target price of $14.94, suggesting a potential upside of 29.89%. Given Arlington Asset Investment Corp’s higher possible upside, analysts clearly believe Arlington Asset Investment Corp is more favorable than Noah Holdings.

Valuation and Earnings

This table compares Noah Holdings and Arlington Asset Investment Corp’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Noah Holdings $409.59 million 5.34 $122.75 million $1.73 22.39
Arlington Asset Investment Corp $45.40 million 6.57 -$37.89 million ($1.46) -7.88

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.

Noah Holdings Company Profile

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.

Arlington Asset Investment Corp Company Profile

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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