Reviewing TD Ameritrade Holding Corporation (AMTD) & Cowen Group (COWN)

Cowen Group (NASDAQ: COWN) and TD Ameritrade Holding Corporation (NASDAQ:AMTD) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their valuation, risk, earnings, institutional ownership, analyst recommendations, profitabiliy and dividends.

Analyst Ratings

This is a summary of current recommendations and price targets for Cowen Group and TD Ameritrade Holding Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cowen Group 0 1 0 0 2.00
TD Ameritrade Holding Corporation 0 6 8 0 2.57

Cowen Group currently has a consensus target price of $17.00, suggesting a potential upside of 5.92%. TD Ameritrade Holding Corporation has a consensus target price of $42.50, suggesting a potential upside of 3.36%. Given Cowen Group’s higher probable upside, equities analysts plainly believe Cowen Group is more favorable than TD Ameritrade Holding Corporation.

Dividends

TD Ameritrade Holding Corporation pays an annual dividend of $0.72 per share and has a dividend yield of 1.8%. Cowen Group does not pay a dividend. TD Ameritrade Holding Corporation pays out 44.7% of its earnings in the form of a dividend.

Earnings & Valuation

This table compares Cowen 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
Cowen Group $399.60 million 1.09 -$19.55 million ($0.72) -22.29
TD Ameritrade Holding Corporation $3.38 billion 6.42 $850.17 million $1.61 25.54

TD Ameritrade Holding Corporation has higher revenue and earnings than Cowen Group. Cowen 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.

Profitability

This table compares Cowen Group and TD Ameritrade Holding Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cowen Group -2.59% -2.38% -0.97%
TD Ameritrade Holding Corporation 24.93% 16.02% 2.89%

Risk and Volatility

Cowen Group has a beta of 1.67, suggesting that its stock price is 67% more volatile than the S&P 500. Comparatively, TD Ameritrade Holding Corporation has a beta of 1.44, suggesting that its stock price is 44% more volatile than the S&P 500.

Institutional and Insider Ownership

88.9% of Cowen Group shares are held by institutional investors. Comparatively, 90.8% of TD Ameritrade Holding Corporation shares are held by institutional investors. 6.2% of Cowen 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 large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

TD Ameritrade Holding Corporation beats Cowen Group on 11 of the 15 factors compared between the two stocks.

About Cowen Group

Cowen Inc., formerly Cowen Group, Inc., is a financial services company. The Company provides alternative investment management, investment banking, research, sales and trading, and prime brokerage services. It operates through two segments: alternative investment and broker-dealer. The alternative investment segment includes private equity structures, registered investment companies and listed investment vehicles. The broker-dealer segment offers industry focused investment banking for growth-oriented companies, including advisory and global capital markets origination and domain knowledge-driven research, and a sales and trading platform for institutional investors. Its alternative investment platform, which operates under the Ramius name, offers investment products and solutions across the liquidity spectrum to institutional and private clients. Ramius offers investors access to strategies to meet their specific needs, including long/short equity and event driven equity.

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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