Interactive Brokers Group (NASDAQ:IBKR) versus Nasdaq (NDAQ) Financial Analysis

Interactive Brokers Group (NASDAQ: IBKR) and Nasdaq (NASDAQ:NDAQ) are both large-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, profitability, dividends, earnings, analyst recommendations, valuation and risk.

Dividends

Interactive Brokers Group pays an annual dividend of $0.40 per share and has a dividend yield of 1.0%. Nasdaq pays an annual dividend of $1.52 per share and has a dividend yield of 2.0%. Interactive Brokers Group pays out 38.8% of its earnings in the form of a dividend. Nasdaq pays out 118.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a summary of recent recommendations for Interactive Brokers Group and Nasdaq, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Interactive Brokers Group 1 4 0 0 1.80
Nasdaq 0 4 3 0 2.43

Interactive Brokers Group presently has a consensus target price of $38.60, indicating a potential downside of 5.11%. Nasdaq has a consensus target price of $73.86, indicating a potential downside of 2.18%. Given Nasdaq’s stronger consensus rating and higher possible upside, analysts clearly believe Nasdaq is more favorable than Interactive Brokers Group.

Risk & Volatility

Interactive Brokers Group has a beta of 0.94, indicating that its share price is 6% less volatile than the S&P 500. Comparatively, Nasdaq has a beta of 0.76, indicating that its share price is 24% less volatile than the S&P 500.

Insider & Institutional Ownership

14.3% of Interactive Brokers Group shares are held by institutional investors. Comparatively, 75.6% of Nasdaq shares are held by institutional investors. 3.4% of Interactive Brokers Group shares are held by insiders. Comparatively, 1.6% of Nasdaq shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

This table compares Interactive Brokers Group and Nasdaq’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Interactive Brokers Group 4.97% 1.19% 0.13%
Nasdaq 5.76% 12.19% 4.64%

Earnings and Valuation

This table compares Interactive Brokers Group and Nasdaq’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Interactive Brokers Group $1.36 billion 2.07 $71.16 million $1.03 39.50
Nasdaq $3.87 billion 3.23 $1.21 billion $1.28 58.98

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

Summary

Nasdaq beats Interactive Brokers Group on 12 of the 16 factors compared between the two stocks.

About Interactive Brokers Group

Interactive Brokers Group, Inc. (IBG, Inc.) is a holding company. The Company is an automated global electronic broker and market maker specializing in routing orders, and executing and processing trades in securities, futures, foreign exchange instruments, bonds and mutual funds on over 120 electronic exchanges and market centers around the world and offering custody, prime brokerage, securities and margin lending services to customers. It operates in two segments: electronic brokerage and market making. It conducts its electronic brokerage business through its Interactive Brokers (IB) subsidiaries. It conducts its market making business through its Timber Hill (TH) subsidiaries. In the United States, it conducts its business from Greenwich, Connecticut and Chicago, Illinois. Outside the United States, it conducts business in Canada, England, Switzerland, Liechtenstein, China (Hong Kong and Shanghai), India, Australia and Japan.

About Nasdaq

Nasdaq, Inc. (Nasdaq) is a holding company. The Company is a provider of trading, clearing, exchange technology, regulatory, securities listing, information and public company services. It manages, operates and provides its products and services through four segments: Market Services, Corporate Services, Information Services and Market Technology. Its global offerings include trading and clearing across various asset classes, trade management services, data products, financial indexes, capital formation solutions, corporate solutions, and market technology products and services. Its technology markets across the globe, supporting equity derivative trading, clearing and settlement, cash equity trading, fixed income trading and various other functions. Its Market Services segment include its equity derivative trading and clearing, cash equity trading, fixed income clearing corporation and trade management services businesses. Its Corporate Solutions business serves corporate clients.

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