Financial Contrast: LPL Financial (LPLA) vs. Cboe Global Markets (CBOE)

LPL Financial (NASDAQ: LPLA) and Cboe Global Markets (NASDAQ:CBOE) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, risk, valuation, analyst recommendations, earnings, dividends and profitability.

Institutional & Insider Ownership

93.0% of LPL Financial shares are owned by institutional investors. Comparatively, 82.5% of Cboe Global Markets shares are owned by institutional investors. 2.6% of LPL Financial shares are owned by insiders. Comparatively, 0.9% of Cboe Global Markets shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares LPL Financial and Cboe Global Markets’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
LPL Financial 6.33% 31.76% 5.88%
Cboe Global Markets 18.82% 15.06% 8.50%

Dividends

LPL Financial pays an annual dividend of $1.00 per share and has a dividend yield of 1.4%. Cboe Global Markets pays an annual dividend of $1.08 per share and has a dividend yield of 1.0%. LPL Financial pays out 33.3% of its earnings in the form of a dividend. Cboe Global Markets pays out 31.6% 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.

Risk & Volatility

LPL Financial has a beta of 1.63, indicating that its stock price is 63% more volatile than the S&P 500. Comparatively, Cboe Global Markets has a beta of 0.59, indicating that its stock price is 41% less volatile than the S&P 500.

Earnings & Valuation

This table compares LPL Financial and Cboe Global Markets’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
LPL Financial $4.28 billion 1.45 $238.86 million $3.00 23.21
Cboe Global Markets $2.23 billion 5.23 $400.60 million $3.42 30.27

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

Analyst Ratings

This is a summary of current recommendations and price targets for LPL Financial and Cboe Global Markets, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
LPL Financial 0 4 6 0 2.60
Cboe Global Markets 1 8 4 0 2.23

LPL Financial presently has a consensus target price of $77.60, suggesting a potential upside of 11.45%. Cboe Global Markets has a consensus target price of $115.55, suggesting a potential upside of 11.59%. Given Cboe Global Markets’ higher probable upside, analysts plainly believe Cboe Global Markets is more favorable than LPL Financial.

About LPL Financial

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.

About Cboe Global Markets

Cboe Global Markets, Inc., through its subsidiaries, operates as an options exchange in the United States. The company operates in five segments: Options, U.S. Equities, Futures, European Equities, and Global FX. The Options segment trades in listed market indexes. The U.S. Equities segment trades in listed cash equities; and provides exchange-traded products (ETP) transaction and ETP listing services. The Futures segment trades in futures, bitcoins, and other products. The European Equities segment trades in pan-European listed equities transaction services, ETPs, exchange-traded commodities, and international depository receipts. The Global FX segment provides institutional foreign exchange (FX) and non-deliverable forward FX transactions services. It has strategic relationships with S&P Dow Jones Indices, LLC; Frank Russell Company; FTSE International Limited; MSCI Inc.; DJI Opco, LLC; Cboe Vest Financial Group, Inc.; and Gemini Trust Company, LLC. The company was formerly known as CBOE Holdings, Inc. and changed its name to Cboe Global Markets, Inc. in October 2017. Cboe Global Markets, Inc. was founded in 1973 and is headquartered in Chicago, Illinois.

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