LPL Financial Holdings (NASDAQ:LPLA) and Goldman Sachs Group, Inc. (The) (GS) Critical Survey
LPL Financial Holdings (NASDAQ: LPLA) and Goldman Sachs Group, Inc. (The) (NYSE:GS) are both mid-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, profitabiliy, institutional ownership, earnings, risk, dividends and analyst recommendations.
Volatility & Risk
LPL Financial Holdings has a beta of 1.84, meaning that its stock price is 84% more volatile than the S&P 500. Comparatively, Goldman Sachs Group, Inc. (The) has a beta of 1.42, meaning that its stock price is 42% more volatile than the S&P 500.
Institutional and Insider Ownership
91.2% of LPL Financial Holdings shares are held by institutional investors. Comparatively, 73.7% of Goldman Sachs Group, Inc. (The) shares are held by institutional investors. 4.0% of LPL Financial Holdings shares are held by insiders. Comparatively, 2.6% of Goldman Sachs Group, Inc. (The) shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
LPL Financial Holdings pays an annual dividend of $1.00 per share and has a dividend yield of 2.2%. Goldman Sachs Group, Inc. (The) pays an annual dividend of $3.00 per share and has a dividend yield of 1.3%. LPL Financial Holdings pays out 43.5% of its earnings in the form of a dividend. Goldman Sachs Group, Inc. (The) pays out 15.7% 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. Goldman Sachs Group, Inc. (The) has raised its dividend for 5 consecutive years.
Valuation & Earnings
This table compares LPL Financial Holdings and Goldman Sachs Group, Inc. (The)’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|LPL Financial Holdings||$4.13 billion||1.00||$560.84 million||$2.30||19.96|
|Goldman Sachs Group, Inc. (The)||$32.25 billion||2.79||$7.37 billion||$19.06||12.22|
Goldman Sachs Group, Inc. (The) has higher revenue and earnings than LPL Financial Holdings. Goldman Sachs Group, Inc. (The) is trading at a lower price-to-earnings ratio than LPL Financial Holdings, indicating that it is currently the more affordable of the two stocks.
This table compares LPL Financial Holdings and Goldman Sachs Group, Inc. (The)’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|LPL Financial Holdings||5.10%||26.45%||4.70%|
|Goldman Sachs Group, Inc. (The)||26.44%||11.25%||0.97%|
This is a summary of current ratings and price targets for LPL Financial Holdings and Goldman Sachs Group, Inc. (The), as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|LPL Financial Holdings||1||4||3||1||2.44|
|Goldman Sachs Group, Inc. (The)||1||13||11||0||2.40|
LPL Financial Holdings presently has a consensus price target of $42.44, suggesting a potential downside of 7.55%. Goldman Sachs Group, Inc. (The) has a consensus price target of $237.50, suggesting a potential upside of 1.97%. Given Goldman Sachs Group, Inc. (The)’s higher probable upside, analysts plainly believe Goldman Sachs Group, Inc. (The) is more favorable than LPL Financial Holdings.
LPL Financial Holdings Company Profile
LPL Financial Holdings Inc. is a broker-dealer, a custodian for registered investment advisors and an independent consultant to retirement plans. The Company provides a platform of brokerage and investment advisory services to independent financial advisors, including financial advisors at financial institutions across the country. It also supported approximately 4,000 financial advisors, affiliated and licensed with insurance companies through customized clearing services, advisory platforms and technology solutions, as of December 31, 2016. Through its advisors, it is a distributor of financial products and services in the United States. It provides its technology and service to advisors through a technology platform that is server-based and Web-accessible. Its technology offerings are designed to permit its advisors to manage various aspects of their businesses. It automates time-consuming processes, such as account opening and management, document imaging and account rebalancing.
Goldman Sachs Group, Inc. (The) Company Profile
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.
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