OTC Markets Group (OTCM) & BGC Partners (BGCP) Financial Review

OTC Markets Group (OTCMKTS:OTCM) and BGC Partners (NASDAQ:BGCP) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, risk, analyst recommendations, profitability, dividends, valuation and earnings.

Valuation and Earnings

This table compares OTC Markets Group and BGC Partners’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
OTC Markets Group $52.18 million 7.19 $12.56 million $1.82 17.86
BGC Partners $3.35 billion 1.07 $51.47 million $1.20 9.12

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

Dividends

OTC Markets Group pays an annual dividend of $0.60 per share and has a dividend yield of 1.8%. BGC Partners pays an annual dividend of $0.72 per share and has a dividend yield of 6.6%. OTC Markets Group pays out 33.0% of its earnings in the form of a dividend. BGC Partners pays out 60.0% 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. BGC Partners has raised its dividend for 3 consecutive years. BGC Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares OTC Markets Group and BGC Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
OTC Markets Group 26.16% N/A N/A
BGC Partners 1.53% 46.19% 8.99%

Insider and Institutional Ownership

0.0% of OTC Markets Group shares are owned by institutional investors. Comparatively, 51.6% of BGC Partners shares are owned by institutional investors. 32.8% of BGC Partners shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of current recommendations for OTC Markets Group and BGC Partners, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
OTC Markets Group 0 0 0 0 N/A
BGC Partners 0 0 1 0 3.00

Risk and Volatility

OTC Markets Group has a beta of 0.09, meaning that its share price is 91% less volatile than the S&P 500. Comparatively, BGC Partners has a beta of 1.04, meaning that its share price is 4% more volatile than the S&P 500.

Summary

BGC Partners beats OTC Markets Group on 10 of the 15 factors compared between the two stocks.

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.

BGC Partners Company Profile

BGC Partners, Inc. operates as a brokerage company servicing the financial and real estate markets worldwide. It operates in two segments, Financial Services and Real Estate Services. The Financial Services segment provides brokerage services for fixed income, interest rate derivatives, spot foreign exchange, foreign exchange derivatives, government bonds, corporate bonds, credit derivatives, insurance and money market products, energy, metals, equity derivatives, and structured market data products and services. This segment also offers trade execution, broker-dealer, clearing, processing, trade compression, and other back-office services. In addition, it provides screen-based market solutions, which enable its clients to develop a marketplace, trade with their customers, issue debt, trade odd lots, access program trading interfaces, and access its network and intellectual property; software and technology infrastructure for the transactional and technology related elements; and option pricing and analysis tools. Further, this segment offers financial technology solutions, post-trade, and analytics related to financial instruments and markets under the FENICS, BGC Trader, FENICS Market Data, BGC Market Data, Capitalab, and Lucera brands. The Real Estate Services segment offers corporate advisory, investment sales, and agency leasing services; lending and loan servicing, due diligence and underwriting, workplace and occupancy strategy, and corporate and consulting services, as well as intercompany referrals; real estate finance, consulting, appraisal, and valuation services; project and development management services; and property and facilities management services. The company primarily serves banks, broker-dealers, investment banks, trading firms, hedge funds, governments, corporations, property owners, real estate developers, and investment firms, as well as institutional clients. BGC Partners, Inc. was founded in 1945 and is headquartered in New York, New York.

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