Noah (NYSE:NOAH) and StepStone Group (NASDAQ:STEP) Critical Contrast

Noah (NYSE:NOAH) and StepStone Group (NASDAQ:STEP) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, dividends, valuation, earnings and profitability.

Institutional & Insider Ownership

42.7% of Noah shares are owned by institutional investors. Comparatively, 55.5% of StepStone Group shares are owned by institutional investors. 47.2% of Noah shares are owned by company insiders. Comparatively, 19.9% of StepStone Group shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

Noah pays an annual dividend of $1.03 per share and has a dividend yield of 12.5%. StepStone Group pays an annual dividend of $0.84 per share and has a dividend yield of 1.5%. Noah pays out 57.5% of its earnings in the form of a dividend. StepStone Group pays out 93.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Noah is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Noah	$3.14 billion	0.17	$142.18 million	$1.79	4.61
StepStone Group	$711.63 million	8.51	$58.09 million	$0.90	60.78

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

Analyst Ratings

This is a summary of current ratings and price targets for Noah and StepStone Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Noah	0	1	1	0	2.50
StepStone Group	0	5	3	0	2.38

Noah presently has a consensus target price of $15.50, suggesting a potential upside of 87.88%. StepStone Group has a consensus target price of $45.88, suggesting a potential downside of 16.13%. Given Noah’s stronger consensus rating and higher probable upside, research analysts clearly believe Noah is more favorable than StepStone Group.

Profitability

This table compares Noah and StepStone Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Noah	31.26%	9.08%	7.43%
StepStone Group	N/A	10.02%	4.55%

Volatility & Risk

Noah has a beta of 0.76, meaning that its stock price is 24% less volatile than the S&P 500. Comparatively, StepStone Group has a beta of 1.27, meaning that its stock price is 27% more volatile than the S&P 500.

Summary

Noah beats StepStone Group on 10 of the 16 factors compared between the two stocks.

About Noah

Noah Holdings Limited, together with its subsidiaries, operates as a wealth and asset management service provider with the focus on investment and asset allocation services for high net worth individuals and enterprises in Mainland of China, Hong Kong, and internationally. It operates through three segments: Wealth Management, Asset Management, and Other Services. The company offers investment products, including domestic and overseas mutual fund products, private secondary products, and other products; customized value-added financial services, such as investor education and trust services, as well as insurance brokerage services; and insurance products. It also provides onshore and offshore private equity, real estate, public securities, multi-strategy, and other investment products, as well as lending services. The company was founded in 2005 and is headquartered in Shanghai, the People's Republic of China.

About StepStone Group

StepStone Group LP. is an investment firm specializing in direct, fund of funds, secondary direct, and secondary indirect investments. For direct investment, it seeks to invest in venture debt, incubation, mezzanine, distressed/vulture, seed/startup, early venture, mid venture, late venture, emerging growth, later stage, turnaround, growth capital, industry consolidation, recapitalization, private equity and buyout investments in mature and middle market companies. It prefers to invest in natural resources, technology, healthcare, services, materials, manufacturing, consumer durables, apparel, hotels, restaurants and leisure, media, retailing, consumer staples, financials, telecommunication services, energy, infrastructure, real estate, and real asset. The firm invests globally with a focus on United States, North America, Europe, Asia, Latin America, Middle East, Africa, Brazil, Mexico, Argentina, Colombia, New Zealand, China, India, Korea, Japan, Taiwan, and Australia region. It typically invests between $15 million and $200 million in firms with enterprise value between $150 million and $25000 million. The firm invests between 5% and 40% in emerging markets. For fund of fund investment, it seeks to invest in private equity funds, venture capital funds, Special situation funds, Real estate funds, Infrastructure funds, mezzanine funds, and turnaround/distressed funds. It considers investments in both domestic and international funds. It also seeks to make co-investments and follow-on investments and considers partial interests in funds. StepStone Group LP. was founded in 2007 and is based in LA Jolla, California with additional offices across North America, South America, Europe, Australia, Asia, New York, New York.