Critical Comparison: Nomura (NYSE:NMR) versus Rand Capital (NASDAQ:RAND)

Rand Capital (NASDAQ:RAND) and Nomura (NYSE:NMR) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, earnings, valuation, dividends, risk, profitability and institutional ownership.

Risk & Volatility

Rand Capital has a beta of 0.11, meaning that its share price is 89% less volatile than the S&P 500. Comparatively, Nomura has a beta of 0.7, meaning that its share price is 30% less volatile than the S&P 500.

Institutional & Insider Ownership

15.1% of Nomura shares are held by institutional investors. 68.2% of Rand Capital shares are held by company insiders. Comparatively, 0.0% of Nomura shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Dividends

Rand Capital pays an annual dividend of $1.16 per share and has a dividend yield of 10.8%. Nomura pays an annual dividend of $0.24 per share and has a dividend yield of 2.3%. Rand Capital pays out -2,900.0% of its earnings in the form of a dividend. Nomura pays out 27.9% 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. Rand Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Rand Capital and Nomura, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rand Capital	1	0	0	0	1.00
Nomura	0	1	3	1	3.00

Nomura has a consensus price target of $10.20, indicating a potential downside of 2.35%. Given Nomura’s stronger consensus rating and higher possible upside, analysts plainly believe Nomura is more favorable than Rand Capital.

Profitability

This table compares Rand Capital and Nomura’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Rand Capital	-2.67%	5.47%	5.23%
Nomura	8.09%	10.42%	0.63%

Valuation and Earnings

This table compares Rand Capital and Nomura”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Rand Capital	$6.47 million	4.93	-$8.04 million	($0.04)	-268.75
Nomura	$31.61 billion	0.97	$2.39 billion	$0.86	12.15

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

Summary

Nomura beats Rand Capital on 12 of the 17 factors compared between the two stocks.

About Rand Capital

Rand Capital Corporation is a business development company specializing in subordinated debt with warrants or preferred equity and venture capital investments. Within private equity, the firm specializing in capital growth and lower middle market investments. Within venture capital, it specializing in early to late-stage private businesses. It does not prefer to invest in real estate sector. It prefers to invest in software, professional services, manufacturing, consumer, healthcare, automotive and public d stocks. It prefers to invest in East or Midwest U.S. operations sectors. It typically invests between $0.75 million and $5 million with initial target size of $1.5 million. It seeks to invest in companies having more than $2 million in revenue or having excess of $1.5 million and up to $5 million in EBITDA. It prefers to be a minority stake and seeks to take a Board seat in its portfolio companies. It typically holds its investments for a period up to five years.

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.