Head-To-Head Survey: LPL Financial (NASDAQ:LPLA) vs. Interactive Brokers Group (NASDAQ:IBKR)

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

Dividends

LPL Financial pays an annual dividend of $1.20 per share and has a dividend yield of 0.4%. Interactive Brokers Group pays an annual dividend of $0.32 per share and has a dividend yield of 0.5%. LPL Financial pays out 10.9% of its earnings in the form of a dividend. Interactive Brokers Group pays out 14.5% 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. Interactive Brokers Group has increased its dividend for 2 consecutive years. Interactive Brokers Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for LPL Financial and Interactive Brokers Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
LPL Financial	0	5	9	1	2.73
Interactive Brokers Group	0	2	8	0	2.80

LPL Financial currently has a consensus price target of $426.43, suggesting a potential upside of 44.82%. Interactive Brokers Group has a consensus price target of $76.97, suggesting a potential upside of 12.17%. Given LPL Financial’s higher probable upside, analysts clearly believe LPL Financial is more favorable than Interactive Brokers Group.

Volatility & Risk

LPL Financial has a beta of 0.56, meaning that its share price is 44% less volatile than the S&P 500. Comparatively, Interactive Brokers Group has a beta of 1.25, meaning that its share price is 25% more volatile than the S&P 500.

Earnings and Valuation

This table compares LPL Financial and Interactive Brokers Group”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
LPL Financial	$16.99 billion	1.39	$863.02 million	$11.01	26.74
Interactive Brokers Group	$10.42 billion	11.17	$984.00 million	$2.21	31.05

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

Profitability

This table compares LPL Financial and Interactive Brokers Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
LPL Financial	5.08%	34.19%	9.35%
Interactive Brokers Group	9.44%	5.12%	0.52%

Insider and Institutional Ownership

95.7% of LPL Financial shares are owned by institutional investors. Comparatively, 23.8% of Interactive Brokers Group shares are owned by institutional investors. 1.3% of LPL Financial shares are owned by insiders. Comparatively, 2.8% of Interactive Brokers Group shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

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.

About Interactive Brokers Group

Interactive Brokers Group, Inc. operates as an automated electronic broker worldwide. The company engages in the execution, clearance, and settlement of trades in stocks, options, futures, foreign exchange instruments, bonds, mutual funds, exchange traded funds (ETFs), precious metals, and cryptocurrencies. It also custodies and services accounts for hedge and mutual funds, ETFs, registered investment advisors, proprietary trading groups, introducing brokers, and individual investors. In addition, the company offers custody, prime brokerage, securities, and margin lending services. It serves institutional and individual customers through electronic exchanges and market centers. The company was founded in 1977 and is headquartered in Greenwich, Connecticut.