Goldman Sachs Group, Inc. (The) (NYSE: GS) and E*TRADE Financial Corporation (NASDAQ:ETFC) are both large-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, valuation, earnings, dividends, institutional ownership, profitabiliy and analyst recommendations.

Volatility and Risk

Goldman Sachs Group, Inc. (The) has a beta of 1.42, suggesting that its stock price is 42% more volatile than the S&P 500. Comparatively, E*TRADE Financial Corporation has a beta of 1.48, suggesting that its stock price is 48% more volatile than the S&P 500.

Profitability

This table compares Goldman Sachs Group, Inc. (The) and E*TRADE Financial Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Goldman Sachs Group, Inc. (The) 26.44% 11.25% 0.97%
E*TRADE Financial Corporation 28.42% 9.06% 1.03%

Earnings and Valuation

This table compares Goldman Sachs Group, Inc. (The) and E*TRADE Financial Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Goldman Sachs Group, Inc. (The) $32.25 billion 2.79 $7.37 billion $19.06 12.22
E*TRADE Financial Corporation $2.32 billion 4.88 $592.13 million $2.15 19.12

Goldman Sachs Group, Inc. (The) has higher revenue and earnings than E*TRADE Financial Corporation. Goldman Sachs Group, Inc. (The) is trading at a lower price-to-earnings ratio than E*TRADE Financial Corporation, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

73.7% of Goldman Sachs Group, Inc. (The) shares are owned by institutional investors. Comparatively, 93.2% of E*TRADE Financial Corporation shares are owned by institutional investors. 2.6% of Goldman Sachs Group, Inc. (The) shares are owned by insiders. Comparatively, 0.2% of E*TRADE Financial Corporation shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Dividends

Goldman Sachs Group, Inc. (The) pays an annual dividend of $3.00 per share and has a dividend yield of 1.3%. E*TRADE Financial Corporation does not pay a dividend. Goldman Sachs Group, Inc. (The) pays out 15.7% of its earnings in the form of a dividend. E*TRADE Financial Corporation has raised its dividend for 5 consecutive years.

Analyst Recommendations

This is a breakdown of current ratings for Goldman Sachs Group, Inc. (The) and E*TRADE Financial Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Goldman Sachs Group, Inc. (The) 1 13 11 0 2.40
E*TRADE Financial Corporation 0 5 12 0 2.71

Goldman Sachs Group, Inc. (The) currently has a consensus price target of $237.50, suggesting a potential upside of 1.97%. E*TRADE Financial Corporation has a consensus price target of $41.33, suggesting a potential upside of 0.54%. Given Goldman Sachs Group, Inc. (The)’s higher probable upside, equities analysts plainly believe Goldman Sachs Group, Inc. (The) is more favorable than E*TRADE Financial Corporation.

Summary

E*TRADE Financial Corporation beats Goldman Sachs Group, Inc. (The) on 10 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 E*TRADE Financial Corporation

E*Trade Financial Corporation is a financial services company. The Company provides online brokerage and related products and services primarily to individual retail investors under the brand E*TRADE Financial. The Company also provides investor-focused banking products, primarily sweep deposits, to retail investors. It provides its services to customers through its digital platforms and network of industry-licensed customer service representatives and Financial Consultants, over the phone and by e-mail. The Company’s brokerage business is organized into three product areas: Trading, Investing, and Corporate Services. The Company’s Trading products deliver automated trade order placement and execution services. The Company’s Investing products help investors build wealth and address their long-term investing needs. The Company’s Corporate Services channel provides stock plan administration services for both public and private companies.

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