WDR Investment Analysis Report & Stock Research, Waddell & Reed Financial, Inc.

Waddell & Reed Financial, Inc. (WDR)

WDR Stock Report

2-Year Price History

View Larger WDR Chart
NYSE:WDR
$26.64
(8/28 4:01PM)
+0.3%
Open$26.85 Mkt Cap$2.3 Billion
High$26.99 52Wk High$41.00
Low$26.5 52Wk Low$8.57
Volume507,603 Avg Vol 10D607,400

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WDR Revenue

Cash earnings is the most important factor in our analysis, but it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company's stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 10 years. For, WDR the high and low end of the Price to Sales per share ratios are 4.84x and 2.57x respectively.

Notice that WDR's current Price to Sales per share ratio is 2.05x, which is quite a bit below what we consider a normal Price to Sales ratio for this stock. Given normal conditions and a price of $26.64, WDR is 45% below where we would expect to see it. This will beneficially factor into our final analysis of WDR as it is not often that this stock sinks to these levels.

WDR Cash Earnings

Looking at WDR specifically in their Cash Earnings capabilities, Ockham views WDR as above their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for WDR, the current level of Cash Earnings compared to its historical levels helps identify where WDR is in relation to what the investing community was willing to pay for this level of Cash Earnings in the past. With a historical high Cash Earnings per share ratio of 40.49 and a historical low Cash Earnings per share ratio of 21.80, an investor can relate where value becomes optimal.

Given this range of ratios per share, WDR at its current price of $26.64 and a Price to Cash Earnings ratio of 32.10 is 3% above its average historical Price to Cash Earnings ratio. Obviously this makes us more hesitant about WDR because cash earnings would need to rise to improve the valuation. Likewise, a decline in Price to Cash Earnings to below the average of 31.14 would significantly improve our outlook for WDR given the current profit levels.

WDR Dividends

When determining a company's future prospects for success, Ockham Research sees analysis of dividend payments as a key additional factor. Even though it isn't imperative for WDR to shell out a dividend in order to receive a positive rating, it can be helpful to further our analysis.

The estimated annual dividend for WDR is $0.76 producing a current dividend yield of 2.85%. Much like our evaluation of Sales and Cash Earnings per share, we review dividend yields from WDR against the historic high and low levels over all available dividend history. Because dividends are a decision made exclusively by management, we view a healthy and rising dividend as a sign of confidence and strength. The highest dividend yield from WDR over previous years was 8.87% while the lowest dividend yield was 0.86%. While it is quite common for a growth stock to pay no dividend at all, but for a mature company such as WDR that has a history of paying dividends it is disappointing to see their dividend yield drop so significantly. At this time, the current dividend yield is 41.42% below the median yield.

Peer Comparison

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Waddell & Reed Financial, Inc. Industry Grouping

(8/28/2009)
Company Ticker Market Cap (Ml) Latest
Price
Price/Cash Earnings Price/Sales 5-Yr. Rev.
Growth Rate
5-Yr.
Avg. ROE.
Current 10-Yr. Range* Current 10-Yr. Range*
Peer Company Averages (not incuding WDR) 27.90 6.86 » 33.29 3.37 2.14 » 12.03 14.24% 28.62%
*10 year range does not include current year values
Federated Investors Cl B FII $2.7 Billion $26.43 13.35 6.32 » 25.46 1.99 1.32 » 5.77 8.22% 39.52%
Baytex Energy Trust BTE $2.4 Billion $22.31 6.08 2.38 » 8.64 0.00 0.00 » 0.00 n/a 21.26%
Waddell & Reed Financial, Inc. WDR $2.3 Billion $26.64 32.10 7.63 » 51.44 2.05 0.79 » 6.23 15.07% 30.54%
Morningstar, Inc. MORN $2.2 Billion $44.67 18.46 10.30 » 40.34 4.49 2.43 » 8.82 n/a 17.22%
Greenhill & Co Inc GHL $2.1 Billion $75.69 86.01 10.98 » 53.09 10.01 3.16 » 11.72 11.86% 46.46%
AllianceBernstein Holding LP AB $2.1 Billion $22.46 15.60 4.30 » 38.90 0.37 3.78 » 33.86 22.64% 18.66%

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The Latest Financial News
7:16:30 AM WDR $26.93 Waddell & Reed Financial, Inc.
7/28/2009 7:16 AM
“…of -$0.10 misses by $0.02. Revenue of $460M (-41%) vs. $459M. Issues upside guidance for Q3, sees revenue of $480-520M vs. $477M consensus. (PR) WADDELL & REED FINANCIAL (WDR): Q2 EPS of $0.28 beats by $0.03. Revenue of $200M (-21%) vs. $195M. (PR) Waters (WAT): Q2 EPS of $0.78 misses by $0.01. Revenue of $363M (-9%) vs. $366M. (PR) Earnings: Monday After Close ACE Limited (ACE): Q2 EPS of $2.09 beats by $0.15. Net premiums written of …” - WDR on Seeking Alpha Wall St Breakfast
View All Waddell & Reed Financial, Inc. News

Key Fundamentals

WDR - Waddell & Reed Financial, Inc. Fundamentals
Price (8/28 4:01PM) $26.64
Volume (8/28 4:01PM) 507,603
Last Close Price $26.56
10 Day Average Volume 607,400
13 Week Price Range $23.25 - $28.78
52 Week Price Range $8.57 - $41.00
LTM Revenue $806.8 Million
 
Shares Outstanding (12/2008) 85.9 Million
Market Capitalization $2.3 Billion
Shares Held By Institutions 74.2 Million
Institutional Holders 263
% Shares Held By Institutions 86.40%
Earnings Per Share (EPS) $1.15
P/E Ratio 31.30
Book Value Per Share $3.88
 
Gross Margin n/a%
Annual Dividend 0.76
Dividend Yield 2.90%
Beta n/a
Fiscal Year Ends December

About Waddell & Reed Financial, Inc.

Waddell & Reed Financial, Inc. is considered to operate in the Financial sector. They specifically operate in the Investmnt Brokerage-Regional business segment contained within the Financial Services industry.

A mutual fund and asset management firm, with expertise in a range of investment styles and across a variety of market environments.