Intercontinental Exchange (NYSE: ICE) and Interactive Brokers Group (NASDAQ:IBKR) are both large-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, analyst recommendations, dividends, risk, earnings, valuation and institutional ownership.
Insider & Institutional Ownership
90.0% of Intercontinental Exchange shares are owned by institutional investors. Comparatively, 15.8% of Interactive Brokers Group shares are owned by institutional investors. 1.5% of Intercontinental Exchange shares are owned by insiders. Comparatively, 3.4% of Interactive Brokers Group shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Intercontinental Exchange has a beta of 0.73, suggesting that its stock price is 27% less volatile than the S&P 500. Comparatively, Interactive Brokers Group has a beta of 1.03, suggesting that its stock price is 3% more volatile than the S&P 500.
Intercontinental Exchange pays an annual dividend of $0.80 per share and has a dividend yield of 1.1%. Interactive Brokers Group pays an annual dividend of $0.40 per share and has a dividend yield of 0.7%. Intercontinental Exchange pays out 29.1% of its earnings in the form of a dividend. Interactive Brokers Group pays out 34.5% 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 raised its dividend for 3 consecutive years. Intercontinental Exchange is clearly the better dividend stock, given its higher yield and lower payout ratio.
This is a breakdown of recent ratings and target prices for Intercontinental Exchange and Interactive Brokers Group, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Interactive Brokers Group||1||4||0||0||1.80|
Intercontinental Exchange presently has a consensus target price of $74.50, suggesting a potential upside of 5.58%. Interactive Brokers Group has a consensus target price of $40.60, suggesting a potential downside of 31.43%. Given Intercontinental Exchange’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Intercontinental Exchange is more favorable than Interactive Brokers Group.
Valuation and Earnings
This table compares Intercontinental Exchange and Interactive Brokers Group’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Intercontinental Exchange||$5.96 billion||6.93||$1.42 billion||$2.75||25.66|
|Interactive Brokers Group||$1.48 billion||16.53||$84.00 million||$1.16||51.04|
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 Intercontinental Exchange and Interactive Brokers Group’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%|
Intercontinental Exchange beats Interactive Brokers Group on 12 of the 17 factors compared between the two stocks.
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.
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.
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