Arlington Asset Investment Corp (AI) versus Noah Holdings (NOAH) Critical Comparison

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

Institutional & Insider Ownership

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

Analyst Recommendations

This is a summary of current ratings and recommmendations for Arlington Asset Investment Corp and Noah Holdings, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Arlington Asset Investment Corp 0 2 2 0 2.50
Noah Holdings 0 0 1 0 3.00

Arlington Asset Investment Corp currently has a consensus target price of $14.94, suggesting a potential upside of 17.90%. Noah Holdings has a consensus target price of $29.00, suggesting a potential downside of 23.80%. Given Arlington Asset Investment Corp’s higher possible upside, equities research analysts plainly believe Arlington Asset Investment Corp is more favorable than Noah Holdings.

Dividends

Arlington Asset Investment Corp pays an annual dividend of $2.20 per share and has a dividend yield of 17.4%. Noah Holdings does not pay a dividend. Arlington Asset Investment Corp pays out -146.7% of its earnings in the form of a dividend.

Profitability

This table compares Arlington Asset Investment Corp and Noah Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Arlington Asset Investment Corp -33.84% -10.44% -0.93%
Noah Holdings 29.39% 18.42% 11.94%

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Arlington Asset Investment Corp $45.40 million 7.24 -$38.93 million ($1.50) -8.45
Noah Holdings $409.59 million 5.25 $122.75 million $1.73 22.00

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.

Risk and Volatility

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

Summary

Noah Holdings beats Arlington Asset Investment Corp on 9 of the 15 factors compared between the two stocks.

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.

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.

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