Head-To-Head Survey: Legg Mason (LM) versus Noah (NOAH)

Legg Mason (NYSE: LM) and Noah (NYSE:NOAH) are both mid-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, earnings, valuation, profitability, risk and dividends.

Risk & Volatility

Legg Mason has a beta of 2.27, meaning that its stock price is 127% more volatile than the S&P 500. Comparatively, Noah has a beta of 2.58, meaning that its stock price is 158% more volatile than the S&P 500.

Insider and Institutional Ownership

82.6% of Legg Mason shares are owned by institutional investors. Comparatively, 46.9% of Noah shares are owned by institutional investors. 12.7% of Legg Mason shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Dividends

Legg Mason pays an annual dividend of $1.12 per share and has a dividend yield of 2.8%. Noah does not pay a dividend. Legg Mason pays out 43.8% of its earnings in the form of a dividend. Noah has raised its dividend for 7 consecutive years.

Valuation & Earnings

This table compares Legg Mason and Noah’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Legg Mason $2.89 billion 1.30 $227.25 million $2.56 15.89
Noah $362.03 million 6.22 $92.73 million $1.80 22.14

Legg Mason has higher revenue and earnings than Noah. Legg Mason is trading at a lower price-to-earnings ratio than Noah, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Legg Mason and Noah’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Legg Mason 8.46% 7.16% 3.49%
Noah 29.74% 18.11% 11.84%

Analyst Recommendations

This is a breakdown of recent recommendations for Legg Mason and Noah, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Legg Mason 3 2 5 0 2.20
Noah 0 0 0 0 N/A

Legg Mason currently has a consensus target price of $43.11, suggesting a potential upside of 5.98%. Given Legg Mason’s higher possible upside, equities analysts clearly believe Legg Mason is more favorable than Noah.

Legg Mason Company Profile

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.

Noah 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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