Investment Technology Group (NYSE: ITG) and FBR & Co (NASDAQ:FBRC) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, risk, profitability, institutional ownership, earnings and dividends.

Institutional & Insider Ownership

87.6% of Investment Technology Group shares are held by institutional investors. Comparatively, 72.4% of FBR & Co shares are held by institutional investors. 2.4% of Investment Technology Group shares are held by company insiders. Comparatively, 13.9% of FBR & Co shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Investment Technology Group and FBR & Co’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 1.44 -$8.61 million ($0.26) -77.35
FBR & Co N/A N/A N/A ($9.00) -1.95

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

Analyst Recommendations

This is a summary of recent recommendations for Investment Technology Group and FBR & Co, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Investment Technology Group 0 1 1 0 2.50
FBR & Co 0 1 0 0 2.00

Investment Technology Group currently has a consensus price target of $20.50, indicating a potential upside of 1.94%. Given Investment Technology Group’s stronger consensus rating and higher probable upside, equities analysts clearly believe Investment Technology Group is more favorable than FBR & Co.

Profitability

This table compares Investment Technology Group and FBR & Co’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%
FBR & Co 3.49% 4.34% 0.49%

Risk and Volatility

Investment Technology Group has a beta of 1.46, meaning that its stock price is 46% more volatile than the S&P 500. Comparatively, FBR & Co has a beta of 0.9, meaning that its stock price is 10% less volatile than the S&P 500.

Dividends

Investment Technology Group pays an annual dividend of $0.28 per share and has a dividend yield of 1.4%. FBR & Co pays an annual dividend of $0.80 per share and has a dividend yield of 4.6%. Investment Technology Group pays out -107.7% of its earnings in the form of a dividend. FBR & Co pays out -8.9% 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.

Summary

Investment Technology Group beats FBR & Co on 9 of the 13 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 FBR & Co

FBR & Co. is an investment banking and institutional brokerage company. The Company focuses on the equity capital markets. The Company operates through two segments: capital markets, which includes investment banking, institutional brokerage and research, and principal investing. Through its broker-dealer operating subsidiaries, the Company focuses its business on providing: capital raising services, including underwriting and placement of public and private equity, equity-linked and debt securities; financial advisory services, including merger and acquisition (M&A) advisory, restructuring, liability management, recapitalization and strategic alternative analysis; institutional sales and trading services focused on equities, equity-linked securities, listed options, high-yield bonds, senior debt and bank loans, as well as securities lending activities, and differentiated securities research.

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