LPL Financial (NASDAQ:LPLA) and OTC Markets Group (OTCMKTS:OTCM) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, valuation, analyst recommendations, profitability, dividends, institutional ownership and risk.
Institutional and Insider Ownership
94.6% of LPL Financial shares are owned by institutional investors. Comparatively, 0.0% of OTC Markets Group shares are owned by institutional investors. 2.6% of LPL Financial shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
LPL Financial pays an annual dividend of $1.00 per share and has a dividend yield of 1.7%. OTC Markets Group pays an annual dividend of $0.60 per share and has a dividend yield of 2.0%. LPL Financial pays out 33.3% of its earnings in the form of a dividend. OTC Markets Group pays out 33.0% 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. OTC Markets Group is clearly the better dividend stock, given its higher yield and lower payout ratio.
This is a summary of current ratings for LPL Financial and OTC Markets Group, as reported by MarketBeat.com.
||Strong Buy Ratings
|OTC Markets Group
LPL Financial presently has a consensus price target of $79.60, indicating a potential upside of 34.89%. Given LPL Financial’s higher probable upside, equities research analysts plainly believe LPL Financial is more favorable than OTC Markets Group.
This table compares LPL Financial and OTC Markets Group’s net margins, return on equity and return on assets.
||Return on Equity
||Return on Assets
|OTC Markets Group
Valuation & Earnings
This table compares LPL Financial and OTC Markets Group’s gross revenue, earnings per share (EPS) and valuation.
||Earnings Per Share
|OTC Markets Group
LPL Financial has higher revenue and earnings than OTC Markets Group. OTC Markets Group is trading at a lower price-to-earnings ratio than LPL Financial, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
LPL Financial has a beta of 1.7, meaning that its stock price is 70% more volatile than the S&P 500. Comparatively, OTC Markets Group has a beta of 0.09, meaning that its stock price is 91% less volatile than the S&P 500.
LPL Financial beats OTC Markets Group on 11 of the 15 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.
OTC Markets Group Company Profile
OTC Markets Group Inc. engages in the financial market business in the United States. It offers OTC Link Alternative Trading System, which connects a network of brokers-dealers providing liquidity and execution services for various securities. The company also provides investors, traders, institutions, and regulators with a suite of enterprise and user level market data licenses through direct or extranet connectivity, third party market data redistributors, or order management systems. In addition, it offers OTC Disclosure & News Service for posting financial reports, disclosure documents, and news releases; Real-Time Level 2 Quote Display, a service that companies sponsor to provide their investors with access to real-time level 2 quotes available on otcmarkets.com; and Blue Sky Monitoring Service for analysis, review, and guidance about a company's compliance with the United States securities laws. The company was formerly known as Pink OTC Markets Inc. and changed its name to OTC Markets Group Inc. in January 2011. OTC Markets Group Inc. was founded in 1904 and is headquartered in New York, New York.
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