Reviewing The PNC Financial Services Group (NYSE:PNC) & LPL Financial (NASDAQ:LPLA)

The PNC Financial Services Group (NYSE:PNC) and LPL Financial (NASDAQ:LPLA) are both large-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their profitability, institutional ownership, valuation, dividends, risk, analyst recommendations and earnings.

Profitability

This table compares The PNC Financial Services Group and LPL Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
The PNC Financial Services Group	18.33%	11.07%	1.11%
LPL Financial	8.23%	46.34%	10.36%

Institutional & Insider Ownership

83.5% of The PNC Financial Services Group shares are held by institutional investors. Comparatively, 95.7% of LPL Financial shares are held by institutional investors. 0.4% of The PNC Financial Services Group shares are held by insiders. Comparatively, 1.3% of LPL Financial shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and recommmendations for The PNC Financial Services Group and LPL Financial, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
The PNC Financial Services Group	1	7	11	1	2.60
LPL Financial	1	1	10	0	2.75

The PNC Financial Services Group presently has a consensus target price of $214.17, suggesting a potential upside of 12.64%. LPL Financial has a consensus target price of $380.83, suggesting a potential downside of 3.76%. Given The PNC Financial Services Group’s higher possible upside, analysts clearly believe The PNC Financial Services Group is more favorable than LPL Financial.

Dividends

The PNC Financial Services Group pays an annual dividend of $6.80 per share and has a dividend yield of 3.6%. LPL Financial pays an annual dividend of $1.20 per share and has a dividend yield of 0.3%. The PNC Financial Services Group pays out 46.5% of its earnings in the form of a dividend. LPL Financial pays out 8.3% 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. The PNC Financial Services Group has raised its dividend for 14 consecutive years. The PNC Financial Services Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares The PNC Financial Services Group and LPL Financial”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
The PNC Financial Services Group	$34.44 billion	2.18	$5.89 billion	$14.62	13.00
LPL Financial	$12.39 billion	2.56	$1.06 billion	$14.45	27.39

The PNC Financial Services Group has higher revenue and earnings than LPL Financial. The PNC Financial Services Group is trading at a lower price-to-earnings ratio than LPL Financial, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

The PNC Financial Services Group has a beta of 1.07, indicating that its stock price is 7% more volatile than the S&P 500. Comparatively, LPL Financial has a beta of 0.64, indicating that its stock price is 36% less volatile than the S&P 500.

Summary

The PNC Financial Services Group beats LPL Financial on 10 of the 18 factors compared between the two stocks.

About The PNC Financial Services Group

The PNC Financial Services Group, Inc. operates as a diversified financial services company in the United States. It operates through three segments: Retail Banking, Corporate & Institutional Banking, and Asset Management Group segments. The company's Retail Banking segment offers checking, savings, and money market accounts, as well as time deposit; residential mortgages, home equity loans and lines of credit, auto loans, credit cards, education loans, and personal and small business loans and lines of credit; and brokerage, insurance, and investment and cash management services. This segment serves consumer and small business customers through a network of branches, digital channels, ATMs, and through phone-based customer contact centers. Its Corporate & Institutional Banking segment provides secured and unsecured loans, letters of credit, and equipment leases; cash and investment management services, receivables and disbursement management services, funds transfer services, international payment services, and access to online/mobile information management and reporting; securities underwriting, loan syndications, customer-related trading, and mergers and acquisitions and equity capital markets advisory related services; and commercial loan servicing and technology solutions. It serves mid-sized and large corporations, and government and not-for-profit entities. The company's Asset Management Group segment offers investment and retirement planning, customized investment management, credit and cash management solutions, and trust management and administration services for high net worth and ultra high net worth individuals, and their families; and multi-generational family planning services for ultra high net worth individuals and their families. It also provides outsourced chief investment officer, custody, private real estate, cash and fixed income client solutions, and retirement plan fiduciary investment services for institutional clients. The company was founded in 1852 and is headquartered in Pittsburgh, Pennsylvania.

About LPL Financial

LPL Financial Holdings Inc., together with its subsidiaries, provides an integrated platform of brokerage and investment advisory services to independent financial advisors and financial advisors at enterprises in the United States. Its brokerage offerings include variable and fixed annuities, mutual funds, equities, fixed income, alternative investments, retirement and 529 education savings plans, and insurance. The company also provides fee-based platforms that provide access to mutual funds, exchange-traded funds, stocks, bonds, certain option strategies, unit investment trusts, and institutional money managers and no-load multi-manager variable annuities. In addition, it offers money market products; and retirement solutions for commission-and fee-based services that allow advisors to provide brokerage services, consultation, and advice to retirement plan sponsors. Further, the company provides other services comprising tools and services that enable advisors to maintain and grow their practices; trust, investment management oversight, and custodial services for estates and families, as well as insurance brokerage general agency services; and technology products, such as proposal generation, investment analytics, and portfolio modeling. The company was formerly known as LPL Investment Holdings Inc. and changed its name to LPL Financial Holdings Inc. in June 2012. LPL Financial Holdings Inc. was founded in 1989 and is based in San Diego, California.