Interactive Brokers Group (NASDAQ:IBKR) and MarketAxess (NASDAQ:MKTX) are both large-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, valuation, risk, dividends, earnings, analyst recommendations and institutional ownership.
Analyst Recommendations
This is a breakdown of current recommendations for Interactive Brokers Group and MarketAxess, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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Interactive Brokers Group | 1 | 0 | 3 | 0 | 2.50 |
MarketAxess | 0 | 7 | 4 | 0 | 2.36 |
Interactive Brokers Group presently has a consensus target price of $65.25, indicating a potential downside of 5.23%. MarketAxess has a consensus target price of $501.80, indicating a potential downside of 1.55%. Given MarketAxess' higher possible upside, analysts clearly believe MarketAxess is more favorable than Interactive Brokers Group.
Volatility and Risk
Interactive Brokers Group has a beta of 0.84, indicating that its share price is 16% less volatile than the S&P 500. Comparatively, MarketAxess has a beta of 0.41, indicating that its share price is 59% less volatile than the S&P 500.
Institutional & Insider Ownership
16.1% of Interactive Brokers Group shares are held by institutional investors. Comparatively, 90.8% of MarketAxess shares are held by institutional investors. 3.2% of Interactive Brokers Group shares are held by company insiders. Comparatively, 3.1% of MarketAxess shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.
Valuation and Earnings
This table compares Interactive Brokers Group and MarketAxess' gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
---|
Interactive Brokers Group | $2.58 billion | 11.12 | $161 million | $2.27 | 30.33 |
MarketAxess | $511.35 million | 37.84 | $204.90 million | $5.40 | 94.39 |
MarketAxess has lower revenue, but higher earnings than Interactive Brokers Group. Interactive Brokers Group is trading at a lower price-to-earnings ratio than MarketAxess, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Interactive Brokers Group and MarketAxess' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
Interactive Brokers Group | 6.90% | 2.24% | 0.23% |
MarketAxess | 42.73% | 33.35% | 26.26% |
Dividends
Interactive Brokers Group pays an annual dividend of $0.40 per share and has a dividend yield of 0.6%. MarketAxess pays an annual dividend of $2.40 per share and has a dividend yield of 0.5%. Interactive Brokers Group pays out 17.6% of its earnings in the form of a dividend. MarketAxess pays out 44.4% 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 is clearly the better dividend stock, given its higher yield and lower payout ratio.
Summary
MarketAxess beats Interactive Brokers Group on 10 of the 16 factors compared between the two stocks.