Critical Survey: LPL Financial (LPLA) vs. Yintech Investment (YIN)

LPL Financial (NASDAQ: LPLA) and Yintech Investment (NASDAQ:YIN) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, valuation, risk, earnings, analyst recommendations, dividends and institutional ownership.

Dividends

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LPL Financial pays an annual dividend of $1.00 per share and has a dividend yield of 1.6%. Yintech Investment pays an annual dividend of $0.40 per share and has a dividend yield of 4.4%. LPL Financial pays out 33.3% of its earnings in the form of a dividend. Yintech Investment pays out 37.7% 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.

Volatility and Risk

LPL Financial has a beta of 1.62, meaning that its share price is 62% more volatile than the S&P 500. Comparatively, Yintech Investment has a beta of -0.33, meaning that its share price is 133% less volatile than the S&P 500.

Valuation & Earnings

This table compares LPL Financial and Yintech Investment’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
LPL Financial $4.28 billion 1.30 $238.86 million $3.00 20.50
Yintech Investment $362.46 million 1.76 $71.13 million $1.06 8.59

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

Insider & Institutional Ownership

93.5% of LPL Financial shares are held by institutional investors. Comparatively, 0.8% of Yintech Investment shares are held by institutional investors. 2.6% of LPL Financial shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Profitability

This table compares LPL Financial and Yintech Investment’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
LPL Financial 5.58% 29.42% 5.41%
Yintech Investment 19.38% 14.84% 12.85%

Analyst Ratings

This is a breakdown of current recommendations and price targets for LPL Financial and Yintech Investment, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
LPL Financial 0 3 7 0 2.70
Yintech Investment 0 0 1 0 3.00

LPL Financial currently has a consensus target price of $71.20, indicating a potential upside of 15.77%. Yintech Investment has a consensus target price of $15.00, indicating a potential upside of 64.65%. Given Yintech Investment’s stronger consensus rating and higher possible upside, analysts clearly believe Yintech Investment is more favorable than LPL Financial.

Summary

LPL Financial beats Yintech Investment on 10 of the 16 factors compared between the two stocks.

LPL Financial Company Profile

LPL Financial Holdings Inc., together with its subsidiaries, provides an integrated platform of brokerage and investment advisory services to independent financial advisors and financial advisors at financial institutions in the United States. Its brokerage offerings include variable and fixed annuities, mutual funds, equities, retirement and 529 education savings plans, fixed income, and insurance, as well as alternative investments, such as non-traded real estate investment trusts and business development companies. The company also provides fee-based advisory platforms that provide access to mutual funds, exchange-traded funds, stocks, bonds, certain option strategies, unit investment trusts, and institutional money managers and no-load multi-manager variable annuities. In addition, it offers cash sweep programs; and retirement solutions for commission- and fee-based services that allow advisors to provide brokerage services, consultation, and advice to retirement plan sponsors. Further, the company provides other services comprising tools and services that enable advisors to maintain and grow their practices; and trust, investment management oversight, and custodial services to trusts for estates and families, as well as insurance brokerage general agency services. It offers its services to approximately 15,000 independent financial advisors, including financial advisors at approximately 700 financial institutions. The company was formerly known as LPL Investment Holdings Inc. and changed its name to LPL Financial Holdings Inc. in June 2012. LPL Financial Holdings Inc. was founded in 1968 and is based in Boston, Massachusetts.

Yintech Investment Company Profile

Yintech Investment Holdings Limited, together with its subsidiaries, provides trading and investment services for online spot commodity trading. The company facilitates the trading by individual customers of gold, silver, and other precious metals and commodities on three exchanges, Shanghai Gold Exchange, Tianjin Precious Metals Exchange, and Guangdong Precious Metals Exchange in China. It provides services, including account opening, investor education, market information, research, live discussion boards, and real-time customer support. Yintech Investment Holdings Limited was founded in 2011 and is headquartered in Shanghai, China.

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