The Goldman Sachs Group (NYSE:GS) and The Charles Schwab (NYSE:SCHW) are both large-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their risk, earnings, analyst recommendations, institutional ownership, profitability, dividends and valuation.
Valuation & Earnings
This table compares The Goldman Sachs Group and The Charles Schwab's top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| The Goldman Sachs Group | $53.92 billion | 1.21 | $8.47 billion | $21.03 | 8.99 |
| The Charles Schwab | $10.72 billion | 4.70 | $3.70 billion | $2.72 | 14.36 |
The Goldman Sachs Group has higher revenue and earnings than The Charles Schwab. The Goldman Sachs Group is trading at a lower price-to-earnings ratio than The Charles Schwab, indicating that it is currently the more affordable of the two stocks.
Analyst Recommendations
This is a summary of recent recommendations for The Goldman Sachs Group and The Charles Schwab, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| The Goldman Sachs Group | 0 | 6 | 15 | 0 | 2.71 |
| The Charles Schwab | 0 | 10 | 3 | 0 | 2.23 |
The Goldman Sachs Group presently has a consensus target price of $250.35, indicating a potential upside of 32.12%. The Charles Schwab has a consensus target price of $41.8462, indicating a potential upside of 9.20%. Given The Goldman Sachs Group's stronger consensus rating and higher probable upside, analysts clearly believe The Goldman Sachs Group is more favorable than The Charles Schwab.
Volatility and Risk
The Goldman Sachs Group has a beta of 1.39, meaning that its share price is 39% more volatile than the S&P 500. Comparatively, The Charles Schwab has a beta of 1.13, meaning that its share price is 13% more volatile than the S&P 500.
Dividends
The Goldman Sachs Group pays an annual dividend of $5.00 per share and has a dividend yield of 2.6%. The Charles Schwab pays an annual dividend of $0.72 per share and has a dividend yield of 1.8%. The Goldman Sachs Group pays out 23.8% of its earnings in the form of a dividend. The Charles Schwab pays out 26.5% 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. The Goldman Sachs Group has raised its dividend for 3 consecutive years. The Goldman Sachs Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Profitability
This table compares The Goldman Sachs Group and The Charles Schwab's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| The Goldman Sachs Group | 16.65% | 10.83% | 0.83% |
| The Charles Schwab | 29.80% | 14.02% | 0.89% |
Insider and Institutional Ownership
68.7% of The Goldman Sachs Group shares are owned by institutional investors. Comparatively, 85.3% of The Charles Schwab shares are owned by institutional investors. 0.6% of The Goldman Sachs Group shares are owned by insiders. Comparatively, 10.8% of The Charles Schwab shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
Summary
The Goldman Sachs Group beats The Charles Schwab on 10 of the 17 factors compared between the two stocks.
