Interactive Brokers Group (NASDAQ:IBKR – Get Free Report) and Federated Hermes (NYSE:FHI – Get Free Report) are both 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.
Profitability
This table compares Interactive Brokers Group and Federated Hermes’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Interactive Brokers Group | 9.94% | 5.37% | 0.52% |
| Federated Hermes | 21.30% | 34.03% | 18.54% |
Insider & Institutional Ownership
23.8% of Interactive Brokers Group shares are held by institutional investors. Comparatively, 75.9% of Federated Hermes shares are held by institutional investors. 2.8% of Interactive Brokers Group shares are held by insiders. Comparatively, 4.2% of Federated Hermes 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.
Risk & Volatility
Dividends
Interactive Brokers Group pays an annual dividend of $0.35 per share and has a dividend yield of 0.4%. Federated Hermes pays an annual dividend of $1.52 per share and has a dividend yield of 2.7%. Interactive Brokers Group pays out 14.0% of its earnings in the form of a dividend. Federated Hermes pays out 28.3% 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. Interactive Brokers Group has increased its dividend for 2 consecutive years and Federated Hermes has increased its dividend for 4 consecutive years. Federated Hermes is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Analyst Recommendations
This is a summary of recent recommendations for Interactive Brokers Group and Federated Hermes, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Interactive Brokers Group | 0 | 5 | 7 | 2 | 2.79 |
| Federated Hermes | 1 | 4 | 1 | 2 | 2.50 |
Interactive Brokers Group presently has a consensus target price of $98.90, indicating a potential upside of 10.11%. Federated Hermes has a consensus target price of $57.40, indicating a potential upside of 0.16%. Given Interactive Brokers Group’s stronger consensus rating and higher possible upside, research analysts clearly believe Interactive Brokers Group is more favorable than Federated Hermes.
Valuation & Earnings
This table compares Interactive Brokers Group and Federated Hermes”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Interactive Brokers Group | $10.42 billion | 14.66 | $984.00 million | $2.50 | 35.93 |
| Federated Hermes | $1.80 billion | 2.38 | $403.30 million | $5.38 | 10.65 |
Interactive Brokers Group has higher revenue and earnings than Federated Hermes. Federated Hermes is trading at a lower price-to-earnings ratio than Interactive Brokers Group, indicating that it is currently the more affordable of the two stocks.
Summary
Interactive Brokers Group beats Federated Hermes on 9 of the 17 factors compared between the two stocks.
About Interactive Brokers Group
Interactive Brokers Group, Inc. operates as an automated electronic broker worldwide. The company engages in the execution, clearance, and settlement of trades in stocks, options, futures, foreign exchange instruments, bonds, mutual funds, exchange traded funds (ETFs), precious metals, and cryptocurrencies. It also custodies and services accounts for hedge and mutual funds, ETFs, registered investment advisors, proprietary trading groups, introducing brokers, and individual investors. In addition, the company offers custody, prime brokerage, securities, and margin lending services. It serves institutional and individual customers through electronic exchanges and market centers. The company was founded in 1977 and is headquartered in Greenwich, Connecticut.
About Federated Hermes
Federated Hermes, Inc. is a publicly owned investment manager. Through its subsidiaries, the firm provides its services to individuals, including high net worth individuals, banking or thrift institutions, investment companies, pension and profit sharing plans, pooled investment vehicles, charitable organizations, state or municipal government entities, and registered investment advisors. Through its subsidiaries, it manages separate client-focused equity, fixed income, balanced and money market mutual funds along with separate client-focused equity, fixed income, money market, and balanced portfolios. Through its subsidiaries, the firm invests in the public equity and fixed income markets across the globe. It invests in growth and value stocks of small-cap, mid-cap, and large-cap companies. The firm makes its fixed income investments in ultra-short, short-term, and intermediate-term mortgage-backed, U.S. Government, U.S. corporate, high yield, and municipal securities. It employs both fundamental and quantitative analysis to make its equity investments. Federated Hermes, Inc. was founded in 1955 and is based in Pittsburgh, Pennsylvania with additional offices in New York City and London, United Kingdom.
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