Wealthfront (NASDAQ:WLTH – Get Free Report) and State Street (NYSE:STT – Get Free Report) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, earnings, dividends, profitability, risk and valuation.
Dividends
Wealthfront pays an annual dividend of $0.32 per share and has a dividend yield of 3.0%. State Street pays an annual dividend of $3.68 per share and has a dividend yield of 2.1%. Wealthfront pays out -34.4% of its earnings in the form of a dividend. State Street pays out 30.0% 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. State Street has increased its dividend for 13 consecutive years. Wealthfront is clearly the better dividend stock, given its higher yield and lower payout ratio.
Profitability
This table compares Wealthfront and State Street’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Wealthfront | -19.42% | -14.62% | -5.13% |
| State Street | 15.81% | 16.11% | 1.00% |
Insider & Institutional Ownership
87.4% of State Street shares are held by institutional investors. 27.4% of Wealthfront shares are held by insiders. Comparatively, 0.3% of State Street shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Valuation & Earnings
This table compares Wealthfront and State Street”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Wealthfront | $371.71 million | 4.49 | -$42.07 million | ($0.93) | -11.49 |
| State Street | $15.52 billion | 3.05 | $2.94 billion | $12.25 | 14.21 |
State Street has higher revenue and earnings than Wealthfront. Wealthfront is trading at a lower price-to-earnings ratio than State Street, indicating that it is currently the more affordable of the two stocks.
Analyst Ratings
This is a breakdown of current ratings and target prices for Wealthfront and State Street, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Wealthfront | 1 | 4 | 5 | 0 | 2.40 |
| State Street | 0 | 6 | 11 | 0 | 2.65 |
Wealthfront currently has a consensus price target of $12.36, indicating a potential upside of 15.65%. State Street has a consensus price target of $193.97, indicating a potential upside of 11.46%. Given Wealthfront’s higher possible upside, equities research analysts plainly believe Wealthfront is more favorable than State Street.
Summary
State Street beats Wealthfront on 11 of the 16 factors compared between the two stocks.
About Wealthfront
Wealthfront is a U.S.-based digital financial services company that provides automated investing, cash management and financial planning tools. Its platform is designed to help individuals manage savings and investments through online accounts and software. Wealthfront’s offerings include diversified investment portfolios managed with automated strategies, cash accounts offered through partner banks, and tools for setting financial goals and tracking progress. The company has also offered services such as individual stock investing and portfolio lines of credit.
About State Street
State Street Corporation is a financial services company headquartered in Boston, Massachusetts. Founded in 1792 as Union Bank, it has a long history serving institutional clients and is among the oldest financial institutions in the United States. The company provides investment servicing, including custody, fund administration, accounting, and related middle- and back-office services. Its clients include asset managers, pension funds, insurers, and other financial institutions. Through State Street Investment Management, the company also offers investment management services and investment products, including the SPDR family of exchange-traded funds.
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