Nasdaq (NDAQ) versus Interactive Brokers Group (NASDAQ:IBKR) Critical Review
Nasdaq (NASDAQ: NDAQ) and Interactive Brokers Group (NASDAQ:IBKR) are both mid-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, risk, valuation, profitabiliy, earnings, analyst recommendations and institutional ownership.
Nasdaq pays an annual dividend of $1.52 per share and has a dividend yield of 2.1%. Interactive Brokers Group pays an annual dividend of $0.40 per share and has a dividend yield of 1.0%. Nasdaq pays out 183.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Interactive Brokers Group pays out 38.8% of its earnings in the form of a dividend.
Insider and Institutional Ownership
74.7% of Nasdaq shares are owned by institutional investors. Comparatively, 14.3% of Interactive Brokers Group shares are owned by institutional investors. 1.6% of Nasdaq shares are owned by company insiders. Comparatively, 3.4% of Interactive Brokers Group shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
This table compares Nasdaq 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||4.97%||1.19%||0.13%|
This is a breakdown of current ratings and price targets for Nasdaq 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|
Nasdaq presently has a consensus price target of $73.11, suggesting a potential upside of 0.51%. Interactive Brokers Group has a consensus price target of $38.60, suggesting a potential downside of 0.41%. Given Nasdaq’s stronger consensus rating and higher possible upside, analysts plainly believe Nasdaq is more favorable than Interactive Brokers Group.
Earnings & Valuation
This table compares Nasdaq and Interactive Brokers Group’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Nasdaq||$3.77 billion||3.19||$1.19 billion||$0.83||87.64|
|Interactive Brokers Group||$1.34 billion||2.00||$71.16 million||$1.03||37.63|
Nasdaq has higher revenue and earnings than Interactive Brokers Group. Interactive Brokers Group is trading at a lower price-to-earnings ratio than Nasdaq, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
Nasdaq has a beta of 0.76, indicating that its share price is 24% less volatile than the S&P 500. Comparatively, Interactive Brokers Group has a beta of 0.93, indicating that its share price is 7% less volatile than the S&P 500.
Nasdaq beats Interactive Brokers Group on 10 of the 16 factors compared between the two stocks.
Nasdaq, Inc. (Nasdaq) is a holding company. The Company is a provider of trading, clearing, exchange technology, regulatory, securities listing, information and public company services. It manages, operates and provides its products and services through four segments: Market Services, Corporate Services, Information Services and Market Technology. Its global offerings include trading and clearing across various asset classes, trade management services, data products, financial indexes, capital formation solutions, corporate solutions, and market technology products and services. Its technology markets across the globe, supporting equity derivative trading, clearing and settlement, cash equity trading, fixed income trading and various other functions. Its Market Services segment include its equity derivative trading and clearing, cash equity trading, fixed income clearing corporation and trade management services businesses. Its Corporate Solutions business serves corporate clients.
About Interactive Brokers Group
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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