Noah Holdings Upped to Strong Buy

On May 22, Zacks Investment Research upgraded Noah Holdings Limited (NOAH) to Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Noah Holdings has been witnessing rising earnings estimates owing to robust first-quarter 2013 results (released on May 6). Moreover, this Shanghai-based asset manager delivered positive earnings surprises in 3 of the last 4 quarters with an average beat of 37.9%.

First quarter earnings per share came in at 17 cents, surpassing the year-ago number by 240.0% and the Zacks Consensus Estimate by 112.5%. Results were primarily aided by better revenues and increased other income, partially offset by a rise in expenses. The company witnessed a higher number of registered clients during the quarter.

Total revenues jumped 94.3% from the prior-year quarter to $34.5 million. Other income was $1.8 million, up 50.6% year over year, mainly attributable to higher investment income. Investment income rose 113.6% to $1.1 million but interest income fell 8.4% to 0.7 million. Total operating cost and expenses increased 46.5% year over year to $20.7 million.

The aggregate value of wealth management products distributed by the company during the reported quarter was approximately $1.4 billion, increasing 63.1% from the prior-year period. Of this, fixed income products constituted 74.9%, private equity fund products 18.8%, and other products – including mutual fund products, private securities investment funds and investment-linked insurance products – 6.3%. The average transaction value per client in the first quarter of 2013 was about $0.8 million, decreasing 12.7% from the prior-year quarter.

The Zacks Consensus Estimate for 2013 increased 44.4% to 65 cents per share based on a single upward estimate revision over the last 30 days. For 2014, over the same time frame, the Zacks Consensus Estimate rose by 92.5% to 77 cents per share.

Other Stocks to Consider

Other well performing stocks in the same sector include Meta Financial Group, Inc. (CASH), Provident Financial Holdings, Inc. (PROV) and Great Southern Bancorp Inc. (GSBC), all of which carry the same Zacks rank as Noah Holdings.

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