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Here's Why its Wise to Buy Waddell & Reed (WDR) Stock Now

Zacks Equity Research

Waddell & Reed Financial, Inc.’s WDR initiatives to boost revenues are expected to yield results in the days ahead. Moreover, the company’s capital deployment activities reflect a solid capital and balance sheet position.

Further, the Zacks Consensus Estimate for current-year earnings has been revised upward by 6.3% over the past 60 days, reflecting analysts’ optimism regarding its earnings prospects. Consequently, the stock currently carries a Zacks Rank #2 (Buy).

The company’s price performance also seems decent. Its shares have gained 4.7% in the past three months, against the industry’s decline of 16.2%.

Waddell & Reed continuously invests in the Wealth Management channel by providing additional support to advisors through training opportunities and enhanced technology tools, including compliance-related technology. These efforts are expected to help boost revenues, inflows and assets under management (AUM), going forward.

Moreover, driven by decent market performance, and rise in underwriting and distribution fees, the company’s total revenues improved in 2018. While the same declined in the first six months of 2019, relatively stable operating environment and a decent AUM balance is likely to support revenues in the days ahead.

Further, with a stable capital position and impressive earnings strength, the company is expected to continue enhancing shareholder value through efficient capital deployment activities.

However, elevated expenses primarily stemming from the company's continued investments in franchise are expected to hurt profitability to some extent. Further, a declining trend in AUM remains a key near-term concern.

Some other top-ranked stocks from the same space are Ameriprise Financial, Inc. AMP, Victory Capital Holdings, Inc. VCTR and Virtus Investment Partners, Inc. VRTS. All these stocks currently carry a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Over the past 60 days, the Zacks Consensus Estimate for Ameriprise Financial’s current-year earnings has been revised marginally upward. Its shares have gained 39.4% so far this year.

Over the past 60 days, Victory Capital witnessed an upward earnings estimate revision of 1.6% for 2019. Its shares have gained 59.9% so far this year.

Virtus Investment Partners has witnessed an upward earnings estimate revision of 2% for 2019 over the past 60 days. The company’s share price has improved 44.5% year to date.

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Ameriprise Financial, Inc. (AMP) : Free Stock Analysis Report
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