Critical Analysis: Goldman Sachs Group, Inc. (The) (GS) and GAIN Capital Holdings (GCAP)
Goldman Sachs Group, Inc. (The) (NYSE: GS) and GAIN Capital Holdings (NYSE:GCAP) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, dividends, earnings, risk, analyst recommendations, profitabiliy and valuation.
Risk and Volatility
Goldman Sachs Group, Inc. (The) has a beta of 1.42, indicating that its share price is 42% more volatile than the S&P 500. Comparatively, GAIN Capital Holdings has a beta of 0.28, indicating that its share price is 72% less volatile than the S&P 500.
This table compares Goldman Sachs Group, Inc. (The) and GAIN Capital Holdings’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Goldman Sachs Group, Inc. (The)||26.38%||11.26%||0.96%|
|GAIN Capital Holdings||2.25%||3.27%||0.63%|
Goldman Sachs Group, Inc. (The) pays an annual dividend of $3.00 per share and has a dividend yield of 1.3%. GAIN Capital Holdings pays an annual dividend of $0.24 per share and has a dividend yield of 3.9%. Goldman Sachs Group, Inc. (The) pays out 15.9% of its earnings in the form of a dividend. GAIN Capital Holdings pays out 218.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. GAIN Capital Holdings has raised its dividend for 5 consecutive years. GAIN Capital Holdings is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This is a breakdown of current ratings and price targets for Goldman Sachs Group, Inc. (The) and GAIN Capital Holdings, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Goldman Sachs Group, Inc. (The)||1||12||11||0||2.42|
|GAIN Capital Holdings||0||1||1||0||2.50|
Goldman Sachs Group, Inc. (The) presently has a consensus target price of $238.83, suggesting a potential upside of 6.01%. GAIN Capital Holdings has a consensus target price of $8.50, suggesting a potential upside of 37.99%. Given GAIN Capital Holdings’ stronger consensus rating and higher possible upside, analysts plainly believe GAIN Capital Holdings is more favorable than Goldman Sachs Group, Inc. (The).
Earnings & Valuation
This table compares Goldman Sachs Group, Inc. (The) and GAIN Capital Holdings’ revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Goldman Sachs Group, Inc. (The)||$32.30 billion||2.85||$7.71 billion||$18.83||11.96|
|GAIN Capital Holdings||$347.04 million||0.85||$5.24 million||$0.11||56.01|
Goldman Sachs Group, Inc. (The) has higher revenue and earnings than GAIN Capital Holdings. Goldman Sachs Group, Inc. (The) is trading at a lower price-to-earnings ratio than GAIN Capital Holdings, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
75.1% of Goldman Sachs Group, Inc. (The) shares are held by institutional investors. Comparatively, 51.6% of GAIN Capital Holdings shares are held by institutional investors. 2.6% of Goldman Sachs Group, Inc. (The) shares are held by company insiders. Comparatively, 5.0% of GAIN Capital Holdings shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
Goldman Sachs Group, Inc. (The) beats GAIN Capital Holdings on 11 of the 17 factors compared between the two stocks.
About Goldman Sachs Group, Inc. (The)
The Goldman Sachs Group, Inc. is an investment banking, securities and investment management company that provides a range of financial services to corporations, financial institutions, governments and individuals. The Company operates in four business segments: Investment Banking, Institutional Client Services, Investing & Lending, and Investment Management. The Investment Banking segment consists of financial advisory and underwriting. The Institutional Client Services segment makes markets and facilitates client transactions in fixed income, equity, currency and commodity products. The investing and lending activities, which are typically longer-term, include its investing and relationship lending activities across various asset classes, primarily debt securities and loans, public and private equity securities, infrastructure and real estate. The Investment Management segment provides investment and wealth advisory services. As of December 2016, it had offices in over 30 countries.
About GAIN Capital Holdings
GAIN Capital Holdings, Inc. (GAIN) is a provider of trading services and solutions, specializing in over-the-counter (OTC) and exchange-traded markets. The Company’s segments include Retail segment, Institutional segment and Futures segment. Through its retail segment, the Company provides its retail customers across the world with access to a range of global financial markets, including spot forex, precious metals, spread bets and contracts for difference (CFDs) on commodities, indices, individual equities and interest rate products, as well OTC options on forex. Its institutional segment provides agency execution services and offers electronic access to spot and forward foreign exchange and precious metals markets through Electronic Communications Network (ECN), through its GTX platform. Its futures segment offers execution and risk management services for exchange-traded futures and futures options on the United States and European exchanges.
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