Critical Analysis: Investment Technology Group (NYSE:ITG) & TD Ameritrade Holding Corporation (AMTD)
Investment Technology Group (NYSE: ITG) and TD Ameritrade Holding Corporation (NASDAQ:AMTD) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their institutional ownership, profitability, dividends, valuation, earnings, risk and analyst recommendations.
Investment Technology Group pays an annual dividend of $0.28 per share and has a dividend yield of 1.4%. TD Ameritrade Holding Corporation pays an annual dividend of $0.72 per share and has a dividend yield of 1.6%. Investment Technology Group pays out -107.7% of its earnings in the form of a dividend. TD Ameritrade Holding Corporation pays out 45.0% 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.
Earnings and Valuation
This table compares Investment Technology Group and TD Ameritrade Holding Corporation’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Investment Technology Group||$464.03 million||1.46||-$8.61 million||($0.26)||-78.50|
|TD Ameritrade Holding Corporation||$3.46 billion||6.69||$844.80 million||$1.60||27.39|
TD Ameritrade Holding Corporation has higher revenue and earnings than Investment Technology Group. Investment Technology Group is trading at a lower price-to-earnings ratio than TD Ameritrade Holding Corporation, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of current recommendations for Investment Technology Group and TD Ameritrade Holding Corporation, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Investment Technology Group||0||0||1||0||3.00|
|TD Ameritrade Holding Corporation||0||6||9||0||2.60|
Investment Technology Group currently has a consensus price target of $20.00, suggesting a potential downside of 2.01%. TD Ameritrade Holding Corporation has a consensus price target of $44.75, suggesting a potential upside of 2.12%. Given TD Ameritrade Holding Corporation’s higher probable upside, analysts plainly believe TD Ameritrade Holding Corporation is more favorable than Investment Technology Group.
Institutional & Insider Ownership
87.2% of Investment Technology Group shares are held by institutional investors. Comparatively, 90.9% of TD Ameritrade Holding Corporation shares are held by institutional investors. 2.4% of Investment Technology Group shares are held by insiders. Comparatively, 0.4% of TD Ameritrade Holding Corporation shares are held by 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 Investment Technology Group and TD Ameritrade Holding Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Investment Technology Group||-1.77%||3.08%||1.42%|
|TD Ameritrade Holding Corporation||24.01%||16.09%||2.89%|
Volatility and Risk
Investment Technology Group has a beta of 1.44, meaning that its share price is 44% more volatile than the S&P 500. Comparatively, TD Ameritrade Holding Corporation has a beta of 1.48, meaning that its share price is 48% more volatile than the S&P 500.
TD Ameritrade Holding Corporation beats Investment Technology Group on 12 of the 16 factors compared between the two stocks.
About Investment Technology Group
Investment Technology Group, Inc. (ITG) is a financial technology company that helps brokers and asset managers improve returns for investors around the world. The Company operates through four segments: U.S. Operations, Canadian Operations, European Operations and Asia Pacific Operations. These four segments provide categories of products and services, such as Execution Services, Workflow Technology and Analytics. Execution Services includes self-directed trading using algorithms, smart routing and matching through POSIT in cash equities, futures and options trading and portfolio trading and high-touch trading desks providing execution expertise. Workflow Technology includes trade order and execution management software applications in addition to network connectivity. Analytics includes tools enabling portfolio managers and traders to improve pre-trade, real-time and post-trade execution performance; portfolio construction and optimization decisions, and securities valuation.
About TD Ameritrade Holding Corporation
TD Ameritrade Holding Corporation is a provider of securities brokerage services and related technology-based financial services. The Company provides its services to retail investors, traders and independent registered investment advisors (RIAs). The Company provides its services through the Internet, a national branch network and relationships with RIAs. The Company’s products and services include common and preferred stock, exchange-traded funds, options, futures, foreign exchange, mutual funds, fixed income, new and secondary issue securities, margin lending, cash management services and annuities. The Company uses its platform to offer brokerage services to retail investors and investment advisors. In addition, it also offers various products and services to retail clients, such as touch-tone trading, trading over the Internet, real-time quotes, extended trading hours and direct access to market destinations.
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