NOAH

We rate Noah Holdings Ltd (NOAH) as a Hold with a composite score of 63.1/100 at a current price of $12.14. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in quality (81th percentile) and value (73th percentile), which together account for the majority of the composite score. Offsetting weakness in stability (35th percentile) and momentum (42th percentile) tempers our overall conviction. We assign a No Moat rating (37/100), Medium uncertainty, and Exemplary capital allocation.

Key items to watch: quarterly earnings execution and sector-level competitive dynamics. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Noah Holdings Ltd holds an above-average position (#19 of 50) within the Finance, Insurance, And Real Estate sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 63.1/100 places it at rank #413 in our full 7,333-stock universe. At $3.8B in market capitalization, Noah Holdings Ltd is a mid-cap player in the Finance, Insurance, And Real Estate space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue contraction of -23% combined with momentum at the 42th percentile paints a cautious picture of the near-term business outlook. The market appears to be pricing in continued challenges, and a catalyst for reversal is not clearly visible from current data.

The margin cascade tells an important story: gross margins of 47% (-29.7pp vs sector) narrow to operating margins of 24% (+7.2pp vs sector) and net margins of 18.6%, yielding a gross-to-net conversion rate of 40%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $12.14, Noah Holdings Ltd appears undervalued relative to its fundamentals. Our value factor score of 73/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 63.8x (a 435% premium to the sector median of 11.9x), EV/EBITDA of 0.6x (discounted to peers), P/B of 0.6x, P/S of 0.6x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis partially supports given strong quality metrics.

We assign a Medium uncertainty rating to Noah Holdings Ltd. The stock presents a balanced risk profile: below-average price stability (35th percentile) and elevated valuation multiple (P/E 63.8x) that leaves limited margin for error. While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: below-average price stability (35th percentile); elevated valuation multiple (P/E 63.8x) that leaves limited margin for error. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 35th percentile and quality factor at the 81th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 47% provide a buffer against cost pressures; conservative leverage (0% D/E) limits balance sheet risk; a 18.15% dividend yield anchors total return. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate Noah Holdings Ltd's capital allocation as Exemplary. Management demonstrates a strong track record of balancing reinvestment with shareholder returns, evidenced by returns on equity of 19.6%, disciplined leverage (0% D/E), a 18.15% dividend yield. Exemplary allocators typically generate returns on equity above 20% while maintaining debt-to-equity below 50% — Noah Holdings Ltd approaches this high bar.

The balance sheet remains conservatively managed, providing financial flexibility for opportunistic investments while maintaining a margin of safety for shareholders. The company returns capital via a 18.15% dividend yield, and the combination of 16.5% return on assets and controlled leverage suggests management is deploying capital at rates well above the cost of capital — the hallmark of exemplary stewardship.

In summary, Noah Holdings Ltd receives a Hold rating with a composite score of 63.1/100 (rank #413 of 7,333). Our quantitative framework assigns a No Moat (37/100, trend: stable), Medium uncertainty, and Exemplary capital allocation. The average factor score across quality, value, momentum, stability, and investment is 59/100.

Our analysis supports a neutral stance on Noah Holdings Ltd. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.