Interactive Brokers Group (NASDAQ: IBKR) and Intercontinental Exchange (NYSE:ICE) are both large-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, earnings, dividends, profitability, valuation, risk and analyst recommendations.
Volatility & Risk
Interactive Brokers Group has a beta of 1.03, suggesting that its stock price is 3% more volatile than the S&P 500. Comparatively, Intercontinental Exchange has a beta of 0.73, suggesting that its stock price is 27% less volatile than the S&P 500.
Interactive Brokers Group pays an annual dividend of $0.40 per share and has a dividend yield of 0.7%. Intercontinental Exchange pays an annual dividend of $0.80 per share and has a dividend yield of 1.1%. Interactive Brokers Group pays out 34.5% of its earnings in the form of a dividend. Intercontinental Exchange pays out 29.1% 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. Intercontinental Exchange has increased its dividend for 3 consecutive years. Intercontinental Exchange is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This is a summary of recent ratings and price targets for Interactive Brokers Group and Intercontinental Exchange, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Interactive Brokers Group||1||4||0||0||1.80|
Interactive Brokers Group currently has a consensus target price of $40.60, indicating a potential downside of 32.78%. Intercontinental Exchange has a consensus target price of $72.38, indicating a potential upside of 2.67%. Given Intercontinental Exchange’s stronger consensus rating and higher probable upside, analysts clearly believe Intercontinental Exchange is more favorable than Interactive Brokers Group.
Valuation and Earnings
This table compares Interactive Brokers Group and Intercontinental Exchange’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Interactive Brokers Group||$1.48 billion||16.86||$84.00 million||$1.16||52.07|
|Intercontinental Exchange||$5.96 billion||6.92||$1.42 billion||$2.75||25.63|
Intercontinental Exchange has higher revenue and earnings than Interactive Brokers Group. Intercontinental Exchange 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.
This table compares Interactive Brokers Group and Intercontinental Exchange’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Interactive Brokers Group||5.29%||1.35%||0.14%|
Insider & Institutional Ownership
15.8% of Interactive Brokers Group shares are held by institutional investors. Comparatively, 90.8% of Intercontinental Exchange shares are held by institutional investors. 3.4% of Interactive Brokers Group shares are held by company insiders. Comparatively, 1.5% of Intercontinental Exchange shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
Intercontinental Exchange beats Interactive Brokers Group on 13 of the 17 factors compared between the two stocks.
Interactive Brokers Group Company Profile
Interactive Brokers Group, Inc. (IBG, Inc.) is a holding company. The Company is an automated global electronic broker and market maker specializing in routing orders, and executing and processing trades in securities, futures, foreign exchange instruments, bonds and mutual funds on over 120 electronic exchanges and market centers around the world and offering custody, prime brokerage, securities and margin lending services to customers. It operates in two segments: electronic brokerage and market making. It conducts its electronic brokerage business through its Interactive Brokers (IB) subsidiaries. It conducts its market making business through its Timber Hill (TH) subsidiaries. In the United States, it conducts its business from Greenwich, Connecticut and Chicago, Illinois. Outside the United States, it conducts business in Canada, England, Switzerland, Liechtenstein, China (Hong Kong and Shanghai), India, Australia and Japan.
Intercontinental Exchange Company Profile
Intercontinental Exchange Inc, formerly IntercontinentalExchange Group, Inc., is a network of regulated exchanges and clearing houses for financial and commodity markets. The Company delivers transparent and accessible data, technology and risk management services to markets around the world through its portfolio of exchanges, including the New York Stock Exchange, ICE Futures, Liffe and Euronext. In February 2014, the Company completed the acquisition of Singapore Mercantile Exchange. In July 2014, Intercontinental Exchange Inc sold its Wombat Financial Software, a unit of NYSE Technologies. Effective September 10, 2014, Intercontinental Exchange Inc acquired an undisclosed majority interest in Holland Clearing House NV.
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