Wells Fargo & Company (NYSE:WFC) & Nomura (NYSE:NMR) Critical Review

Nomura (NYSE:NMR) and Wells Fargo & Company (NYSE:WFC) are both large-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, earnings, dividends, institutional ownership, valuation, risk and profitability.

Risk and Volatility

Nomura has a beta of 0.68, suggesting that its share price is 32% less volatile than the S&P 500. Comparatively, Wells Fargo & Company has a beta of 1.09, suggesting that its share price is 9% more volatile than the S&P 500.

Dividends

Nomura pays an annual dividend of $0.28 per share and has a dividend yield of 3.1%. Wells Fargo & Company pays an annual dividend of $1.80 per share and has a dividend yield of 1.9%. Nomura pays out 35.4% of its earnings in the form of a dividend. Wells Fargo & Company pays out 28.7% 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. Wells Fargo & Company has raised its dividend for 4 consecutive years.

Profitability

This table compares Nomura and Wells Fargo & Company’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Nomura	7.81%	9.88%	0.61%
Wells Fargo & Company	17.27%	12.90%	1.05%

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Nomura and Wells Fargo & Company, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Nomura	0	1	0	1	3.00
Wells Fargo & Company	1	9	13	0	2.52

Wells Fargo & Company has a consensus target price of $95.92, indicating a potential upside of 2.12%. Given Wells Fargo & Company’s higher probable upside, analysts clearly believe Wells Fargo & Company is more favorable than Nomura.

Earnings & Valuation

This table compares Nomura and Wells Fargo & Company”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Nomura	$31.11 billion	0.86	$2.25 billion	$0.79	11.57
Wells Fargo & Company	$123.53 billion	2.39	$21.34 billion	$6.27	14.98

Wells Fargo & Company has higher revenue and earnings than Nomura. Nomura is trading at a lower price-to-earnings ratio than Wells Fargo & Company, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

15.1% of Nomura shares are owned by institutional investors. Comparatively, 75.9% of Wells Fargo & Company shares are owned by institutional investors. 0.0% of Nomura shares are owned by insiders. Comparatively, 0.1% of Wells Fargo & Company shares are owned by 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.

Summary

Wells Fargo & Company beats Nomura on 15 of the 18 factors compared between the two stocks.

About Nomura

Nomura Holdings, Inc. provides various financial services to individuals, corporations, financial institutions, governments, and governmental agencies worldwide. It operates through three segments: Retail, Investment Management, and Wholesale. The Retail segment offers various financial products and investment consultation services. The Investment Management segment engages in the management of funds, investment trusts, and other investment solutions; and provision of investment advisory, custodial, and administrative services. The Wholesale segment is involved in the research, sale, trading, agency execution, and market-making of fixed income and equity-related products. This segment also engages in underwriting various securities and other financial instruments, such as various classes of shares, convertible and exchangeable securities, investment grade and high yield debts, sovereign and emerging market debts, structured securities, and other securities; arranging private placements, as well as other capital raising activities; and the provision of financial advisory services on business transactions comprising mergers and acquisitions, divestitures, spin-offs, capital structuring, corporate defense activities, leveraged buyouts, and risk solutions. The company was formerly known as The Nomura Securities Co., Ltd. and changed its name to Nomura Holdings, Inc. in October 2001. Nomura Holdings, Inc. was incorporated in 1925 and is headquartered in Tokyo, Japan.

About Wells Fargo & Company

Wells Fargo & Co. is a diversified and community-based financial services company, which engages in the provision of banking, insurance, investments, mortgage, and consumer and commercial finance products and services. It operates through the following segments: Consumer Banking and Lending, Commercial Banking, Corporate and Investment Banking, and Wealth and Investment Management. The Consumer Banking and Lending segment offers consumer and small business banking, home lending, credit cards, auto, and personal lending. The Commercial Banking segment provides banking and credit products across industry sectors and municipalities, secured lending and lease products, and treasury management. The Corporate and Investment Banking segment is composed of corporate banking, investment banking, treasury management, commercial real estate lending and servicing, and equity and fixed income solutions, as well as sales, trading, and research capabilities. The Wealth and Investment Management segment refers to personalized wealth management, brokerage, financial planning, lending, private banking, trust, and fiduciary products and services. The company was founded by Henry Wells and William G. Fargo on March 18, 1852 and is headquartered in San Francisco, CA.