Analyzing Interactive Brokers Group (IBKR) and CME Group (CME)
Interactive Brokers Group (NASDAQ: IBKR) and CME Group (NASDAQ:CME) are both mid-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their dividends, valuation, risk, profitabiliy, analyst recommendations, earnings and institutional ownership.
Valuation and Earnings
This table compares Interactive Brokers Group and CME Group’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Interactive Brokers Group||$1.36 billion||1.85||$75.47 million||$1.11||33.34|
|CME Group||$3.59 billion||12.05||$2.45 billion||$4.62||27.56|
CME Group has higher revenue and earnings than Interactive Brokers Group. CME Group 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.
Interactive Brokers Group pays an annual dividend of $0.40 per share and has a dividend yield of 1.1%. CME Group pays an annual dividend of $2.64 per share and has a dividend yield of 2.1%. Interactive Brokers Group pays out 36.0% of its earnings in the form of a dividend. CME Group pays out 57.1% 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.
Insider and Institutional Ownership
86.6% of Interactive Brokers Group shares are owned by institutional investors. Comparatively, 83.6% of CME Group shares are owned by institutional investors. 3.4% of Interactive Brokers Group shares are owned by company insiders. Comparatively, 0.6% of CME Group shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
This table compares Interactive Brokers Group and CME Group’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Interactive Brokers Group||5.45%||1.28%||0.14%|
This is a summary of recent recommendations for Interactive Brokers Group and CME Group, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Interactive Brokers Group||1||3||0||0||1.75|
Interactive Brokers Group presently has a consensus price target of $38.25, suggesting a potential upside of 3.35%. CME Group has a consensus price target of $118.17, suggesting a potential downside of 7.19%. Given Interactive Brokers Group’s higher probable upside, equities analysts plainly believe Interactive Brokers Group is more favorable than CME Group.
Risk and Volatility
Interactive Brokers Group has a beta of 0.93, meaning that its share price is 7% less volatile than the S&P 500. Comparatively, CME Group has a beta of 0.75, meaning that its share price is 25% less volatile than the S&P 500.
CME Group beats Interactive Brokers Group on 10 of the 16 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.
CME Group Company Profile
CME Group Inc., through its exchanges, provides products across all asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural products and metals. The Company’s segment primarily consists of the Chicago Mercantile Exchange Inc. (CME), Board of Trade of the City of Chicago, Inc. (CBOT), New York Mercantile Exchange, Inc. (NYMEX) and Commodity Exchange, Inc. (COMEX) exchanges. The Company provides electronic trading around the globe on its CME Globex platform. The Company also offers clearing and settlement services across asset classes for exchange-traded and over-the-counter derivatives through its clearinghouses CME Clearing and CME Clearing Europe. It also provides hosting, connectivity and customer support for electronic trading through its co-location services. The Company’s CME Direct platform offers side-by-side trading of exchange-listed and privately negotiated markets.
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