Critical Survey: Interactive Brokers Group (IBKR) versus JMP Group (JMP)

Interactive Brokers Group (NASDAQ: IBKR) and JMP Group (NYSE:JMP) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, risk, earnings, analyst recommendations, dividends, institutional ownership and profitability.

Insider & Institutional Ownership

16.4% of Interactive Brokers Group shares are held by institutional investors. Comparatively, 13.7% of JMP Group shares are held by institutional investors. 2.0% of Interactive Brokers Group shares are held by company insiders. Comparatively, 52.8% of JMP Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Volatility & Risk

Interactive Brokers Group has a beta of 0.97, indicating that its stock price is 3% less volatile than the S&P 500. Comparatively, JMP Group has a beta of 0.71, indicating that its stock price is 29% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and target prices for Interactive Brokers Group and JMP Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Interactive Brokers Group 2 2 3 0 2.14
JMP Group 0 1 1 0 2.50

Interactive Brokers Group presently has a consensus price target of $64.00, suggesting a potential downside of 18.47%. JMP Group has a consensus price target of $6.75, suggesting a potential upside of 33.14%. Given JMP Group’s stronger consensus rating and higher possible upside, analysts clearly believe JMP Group is more favorable than Interactive Brokers Group.

Dividends

Interactive Brokers Group pays an annual dividend of $0.40 per share and has a dividend yield of 0.5%. JMP Group pays an annual dividend of $0.36 per share and has a dividend yield of 7.1%. Interactive Brokers Group pays out 26.1% of its earnings in the form of a dividend. JMP Group pays out 180.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

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

Net Margins Return on Equity Return on Assets
Interactive Brokers Group 4.58% 2.04% 0.22%
JMP Group -10.16% 4.19% 0.46%

Valuation and Earnings

This table compares Interactive Brokers Group and JMP Group’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 $1.93 billion 16.77 $76.00 million $1.53 51.31
JMP Group $109.87 million 0.99 -$15.88 million $0.20 25.35

Interactive Brokers Group has higher revenue and earnings than JMP Group. JMP Group 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 JMP Group on 10 of the 16 factors compared between the two stocks.

Interactive Brokers Group Company Profile

Interactive Brokers Group, Inc. operates as an automated electronic broker in approximately 120 electronic exchanges and market centers worldwide. It specializes in executing and clearing trades in securities, futures, foreign exchange instruments, bonds, and mutual funds. The company custodies and services accounts for hedge and mutual funds, registered investment advisors, proprietary trading groups, introducing brokers, and individual investors. It offers custody, prime brokerage, securities, and margin lending services. The company provides electronic execution and clearing services. Interactive Brokers Group, Inc. was founded in 1977 and is headquartered in Greenwich, Connecticut.

JMP Group Company Profile

JMP Group LLC, together with its subsidiaries, provides investment banking, sales and trading, equity research, and asset management products and services in the United States. The company operates through three segments: Broker-Dealer, Asset Management, and Corporate. The Broker-Dealer segment offers various services, such as underwriting and acting as a placement agent for public and private capital markets raising transactions; and financial advisory services in mergers and acquisitions, restructuring, and other strategic transactions. This segment also provides institutional brokerage services and equity research services. The Asset Management segment is involved in the management of a range of pooled investment vehicles, including the hedge funds, hedge funds of funds, and collateralized loan obligations. The Corporate segment includes investments in public and private securities, and investment funds, as well as other investing activities. The company also provides investment advisory services to business development companies. In addition, it serves corporates, institutional clients and investors, and high net-worth individuals. JMP Group LLC was incorporated in 2000 and is headquartered in San Francisco, California.

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