Moelis & (NYSE: MC) and Investment Technology Group (NYSE:ITG) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their profitability, institutional ownership, dividends, valuation, analyst recommendations, earnings and risk.

Dividends

Moelis & pays an annual dividend of $1.48 per share and has a dividend yield of 3.8%. Investment Technology Group pays an annual dividend of $0.28 per share and has a dividend yield of 1.4%. Moelis & pays out 74.0% of its earnings in the form of a dividend. Investment Technology Group pays out -107.7% 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. Investment Technology Group has raised its dividend for 2 consecutive years.

Earnings and Valuation

This table compares Moelis & and Investment Technology Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Moelis & $700.69 million 1.53 $55.04 million $2.00 19.48
Investment Technology Group $464.03 million 1.46 -$8.61 million ($0.26) -78.85

Moelis & has higher revenue and earnings than Investment Technology Group. Investment Technology Group is trading at a lower price-to-earnings ratio than Moelis &, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

89.6% of Moelis & shares are held by institutional investors. Comparatively, 86.7% of Investment Technology Group shares are held by institutional investors. 64.5% of Moelis & shares are held by insiders. Comparatively, 2.4% of Investment Technology Group shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and target prices for Moelis & and Investment Technology Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Moelis & 0 3 4 0 2.57
Investment Technology Group 0 0 1 0 3.00

Moelis & presently has a consensus price target of $37.57, suggesting a potential downside of 3.54%. Investment Technology Group has a consensus price target of $20.00, suggesting a potential downside of 2.44%. Given Investment Technology Group’s stronger consensus rating and higher possible upside, analysts clearly believe Investment Technology Group is more favorable than Moelis &.

Risk and Volatility

Moelis & has a beta of 1.87, suggesting that its share price is 87% more volatile than the S&P 500. Comparatively, Investment Technology Group has a beta of 1.44, suggesting that its share price is 44% more volatile than the S&P 500.

Profitability

This table compares Moelis & and Investment Technology Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Moelis & 8.50% 52.98% 24.68%
Investment Technology Group -1.77% 3.08% 1.42%

Summary

Moelis & beats Investment Technology Group on 12 of the 17 factors compared between the two stocks.

About Moelis &

Moelis & Company is an investment banking advisory company. The Company provides strategic and financial advice to a client base, including corporations, governments and financial sponsors. The Company offers financial advisory services across various industry sectors. It advices its clients on decisions, including mergers and acquisitions (M&A), recapitalizations and restructurings, and other corporate finance matters. With 17 offices located in North and South America, Europe, the Middle East, Asia and Australia, the Company provided information flow and cross-border solutions as of December 31, 2016. The Company offers advisory services in all industries, including consumer, retail and restaurants; energy, power and infrastructure; financial institutions; financial sponsors; general industrials; healthcare; real estate, gaming, lodging and leisure, and technology, media and telecommunications. It advises clients on all aspects of public and private debt and equity transactions.

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.

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