Waddell & Reed (WDR) versus TD Ameritrade (AMTD) Head-To-Head Survey

Waddell & Reed (NYSE: WDR) and TD Ameritrade (NASDAQ:AMTD) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their institutional ownership, valuation, analyst recommendations, earnings, profitability, risk and dividends.

Dividends

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Waddell & Reed pays an annual dividend of $1.00 per share and has a dividend yield of 5.1%. TD Ameritrade pays an annual dividend of $0.84 per share and has a dividend yield of 1.4%. Waddell & Reed pays out 52.1% of its earnings in the form of a dividend. TD Ameritrade pays out 45.7% 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.

Earnings & Valuation

This table compares Waddell & Reed and TD Ameritrade’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Waddell & Reed $1.16 billion 1.40 $141.27 million $1.92 10.15
TD Ameritrade $3.68 billion 9.02 $872.00 million $1.84 31.77

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

Insider & Institutional Ownership

97.4% of Waddell & Reed shares are held by institutional investors. Comparatively, 92.0% of TD Ameritrade shares are held by institutional investors. 3.4% of Waddell & Reed shares are held by company insiders. Comparatively, 0.4% of TD Ameritrade shares are held 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.

Risk and Volatility

Waddell & Reed has a beta of 1.95, suggesting that its stock price is 95% more volatile than the S&P 500. Comparatively, TD Ameritrade has a beta of 1.36, suggesting that its stock price is 36% more volatile than the S&P 500.

Profitability

This table compares Waddell & Reed and TD Ameritrade’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Waddell & Reed 10.72% 16.63% 10.24%
TD Ameritrade 23.39% 18.27% 3.39%

Analyst Recommendations

This is a summary of recent ratings and target prices for Waddell & Reed and TD Ameritrade, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Waddell & Reed 4 3 0 0 1.43
TD Ameritrade 1 5 10 0 2.56

Waddell & Reed presently has a consensus price target of $21.43, indicating a potential upside of 10.00%. TD Ameritrade has a consensus price target of $62.17, indicating a potential upside of 6.36%. Given Waddell & Reed’s higher possible upside, equities research analysts plainly believe Waddell & Reed is more favorable than TD Ameritrade.

Summary

TD Ameritrade beats Waddell & Reed on 9 of the 16 factors compared between the two stocks.

About Waddell & Reed

Waddell & Reed Financial, Inc., through its subsidiaries, provides investment management and advisory, investment product underwriting and distribution, and shareholder services administration to mutual funds, and institutional and separately managed accounts in the United States. The company acts as an investment adviser for institutional and other private investors, and provides sub advisory services to other investment companies; and underwrites and distributes registered open-end mutual fund portfolios. It also offers fee-based asset allocation investment advisory products to advisors channel customers; distributes business partners' variable annuity products, and retirement and life insurance products to advisors channel customers; and sells life insurance and disability products underwritten by various carriers. The company distributes investment products through its wholesale channel comprising other broker/dealers, various retirement platforms, and registered investment advisors, as well as through independent financial advisors; and markets investment advisory services to institutional investors directly or through consultants. Waddell & Reed Financial, Inc. was founded in 1937 and is based in Overland Park, Kansas.

About TD Ameritrade

TD Ameritrade Holding Corporation provides securities brokerage and related technology-based financial services to retail investors, traders, and independent registered investment advisors (RIAs) in the United States. Its products and services include tdameritrade.com, a Web platform for self-directed retail investors; Trade Architect, a Web-based platform for investors and traders to identify opportunities and stay informed; thinkorswim, a desktop platform for traders; and TD Ameritrade Mobile, which allows on-the-go investors and traders to trade and monitor accounts. The company also offers TD Ameritrade Institutional that provides brokerage and custody services to approximately 6,000 independent RIAs and their clients; TD Ameritrade Education, which allows investor education for stocks, options, income investing, and portfolio management; TD Ameritrade's Goal Planning that offers investment consulting and planning services; Selective Portfolios, an advisory service, which develops portfolios of exchange-traded funds (ETFs) and mutual funds; AdvisorDirect, a national referral service for investors; TD Ameritrade Singapore Pte. Ltd. that enables retail investors in Singapore to trade the U.S. markets; and TD Ameritrade Corporate Services, which provide self-directed brokerage services to employees of corporations. In addition, it offers various retail brokerage products and services, such as common and preferred stocks; ETFs; options; futures; foreign exchange; mutual funds; fixed income products; primary and secondary offerings of fixed income securities, closed-end funds, and preferred stocks; margin lending; cash management services; and annuities. The company provides its services primarily through the Internet, a network of retail branches, mobile trading applications, interactive voice response, and registered representatives through telephone. TD Ameritrade Holding Corporation was founded in 1971 and is headquartered in Omaha, Nebraska.

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