Head-To-Head Survey: FactSet Research Systems (NYSE:FDS) vs. LPL Financial (NASDAQ:LPLA)

LPL Financial (NASDAQ:LPLA) and FactSet Research Systems (NYSE:FDS) are both large-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their analyst recommendations, profitability, risk, valuation, institutional ownership, dividends and earnings.

Institutional and Insider Ownership

95.7% of LPL Financial shares are owned by institutional investors. Comparatively, 91.2% of FactSet Research Systems shares are owned by institutional investors. 0.6% of LPL Financial shares are owned by company insiders. Comparatively, 1.2% of FactSet Research Systems shares are owned 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.

Valuation & Earnings

This table compares LPL Financial and FactSet Research Systems”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
LPL Financial	$16.99 billion	1.49	$863.02 million	$12.54	25.59
FactSet Research Systems	$2.48 billion	4.33	$533.48 million	$14.56	20.69

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

Dividends

LPL Financial pays an annual dividend of $1.20 per share and has a dividend yield of 0.4%. FactSet Research Systems pays an annual dividend of $4.64 per share and has a dividend yield of 1.5%. LPL Financial pays out 9.6% of its earnings in the form of a dividend. FactSet Research Systems pays out 31.9% 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. FactSet Research Systems has increased its dividend for 27 consecutive years. FactSet Research Systems is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for LPL Financial and FactSet Research Systems, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
LPL Financial	0	3	14	0	2.82
FactSet Research Systems	6	10	2	1	1.89

LPL Financial presently has a consensus target price of $409.69, indicating a potential upside of 27.64%. FactSet Research Systems has a consensus target price of $271.79, indicating a potential downside of 9.76%. Given LPL Financial’s stronger consensus rating and higher probable upside, analysts plainly believe LPL Financial is more favorable than FactSet Research Systems.

Profitability

This table compares LPL Financial and FactSet Research Systems’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
LPL Financial	5.13%	32.20%	9.35%
FactSet Research Systems	21.54%	31.66%	15.73%

Volatility & Risk

LPL Financial has a beta of 0.53, indicating that its stock price is 47% less volatile than the S&P 500. Comparatively, FactSet Research Systems has a beta of 0.77, indicating that its stock price is 23% less volatile than the S&P 500.

Summary

FactSet Research Systems beats LPL Financial on 10 of the 18 factors compared between the two stocks.

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 enterprises in the United States. Its brokerage offerings include variable and fixed annuities, mutual funds, equities, fixed income, alternative investments, retirement and 529 education savings plans, and insurance. The company also provides fee-based 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 money market products; 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; trust, investment management oversight, and custodial services for estates and families, as well as insurance brokerage general agency services; and technology products, such as proposal generation, investment analytics, and portfolio modeling. 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 1989 and is based in San Diego, California.

About FactSet Research Systems

FactSet Research Systems Inc., a financial data company, provides integrated financial information and analytical applications to the investment community in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company delivers insight and information through the workflow solutions of research, analytics and trading, content and technology solutions, and wealth. It serves portfolio managers, investment banks, asset managers, wealth advisors, corporate clients, and other financial services entities. FactSet Research Systems Inc. was founded in 1978 and is headquartered in Norwalk, Connecticut.