Intercontinental Exchange (NYSE: ICE) and Virtu Financial (NASDAQ:VIRT) are both mid-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, profitability, risk, dividends, earnings and valuation.

Dividends

Intercontinental Exchange pays an annual dividend of $0.80 per share and has a dividend yield of 1.1%. Virtu Financial pays an annual dividend of $0.96 per share and has a dividend yield of 5.7%. Intercontinental Exchange pays out 29.1% of its earnings in the form of a dividend. Virtu Financial pays out 800.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Intercontinental Exchange has increased its dividend for 3 consecutive years.

Earnings and Valuation

This table compares Intercontinental Exchange and Virtu Financial’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Intercontinental Exchange $5.96 billion 6.96 $1.42 billion $2.75 25.79
Virtu Financial $702.27 million 4.49 $32.98 million $0.12 140.42

Intercontinental Exchange has higher revenue and earnings than Virtu Financial. Intercontinental Exchange is trading at a lower price-to-earnings ratio than Virtu Financial, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent ratings and target prices for Intercontinental Exchange and Virtu Financial, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Intercontinental Exchange 0 2 6 0 2.75
Virtu Financial 1 4 1 0 2.00

Intercontinental Exchange presently has a consensus target price of $72.38, suggesting a potential upside of 2.04%. Virtu Financial has a consensus target price of $16.67, suggesting a potential downside of 1.09%. Given Intercontinental Exchange’s stronger consensus rating and higher probable upside, analysts plainly believe Intercontinental Exchange is more favorable than Virtu Financial.

Profitability

This table compares Intercontinental Exchange and Virtu Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Intercontinental Exchange 27.91% 11.01% 2.18%
Virtu Financial 0.13% 11.56% 1.60%

Institutional & Insider Ownership

90.8% of Intercontinental Exchange shares are held by institutional investors. Comparatively, 26.6% of Virtu Financial shares are held by institutional investors. 1.5% of Intercontinental Exchange shares are held by insiders. Comparatively, 69.9% of Virtu Financial 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.

Summary

Intercontinental Exchange beats Virtu Financial on 12 of the 16 factors compared between the two stocks.

About Intercontinental Exchange

Intercontinental Exchange Inc, formerly IntercontinentalExchange Group, Inc., is a network of regulated exchanges and clearing houses for financial and commodity markets. The Company delivers transparent and accessible data, technology and risk management services to markets around the world through its portfolio of exchanges, including the New York Stock Exchange, ICE Futures, Liffe and Euronext. In February 2014, the Company completed the acquisition of Singapore Mercantile Exchange. In July 2014, Intercontinental Exchange Inc sold its Wombat Financial Software, a unit of NYSE Technologies. Effective September 10, 2014, Intercontinental Exchange Inc acquired an undisclosed majority interest in Holland Clearing House NV.

About Virtu Financial

Virtu Financial, Inc. is a holding company. The Company is a technology-enabled market maker and liquidity provider to the financial markets across the world. It is engaged in buying or selling a range of securities and other financial instruments and earning small bid/ask spreads across various transactions. It has a single, multi-asset, multi-currency technology platform, through which it provides quotations to buyers and sellers in equities, commodities, currencies, options, fixed income and other securities on exchanges, markets and liquidity pools in various countries around the world. It makes markets in a range of different assets classes, such as Americas Equities; Europe, the Middle East and Africa (EMEA) Equities; Asia Pacific (APAC) Equities; Global Commodities; Global Currencies, and Options, Fixed Income and Other Securities. It makes markets for global banks, brokers and other intermediaries, and indirectly provides services to retail and institutional investors.

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