Comparing MarketWise (NASDAQ:MKTW) and LPL Financial (NASDAQ:LPLA)

MarketWise (NASDAQ:MKTW) and LPL Financial (NASDAQ:LPLA) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their profitability, risk, dividends, valuation, analyst recommendations, earnings and institutional ownership.

Dividends

MarketWise pays an annual dividend of $1.00 per share and has a dividend yield of 5.3%. LPL Financial pays an annual dividend of $1.20 per share and has a dividend yield of 0.4%. MarketWise pays out 113.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. LPL Financial pays out 9.6% of its earnings in the form of a dividend. MarketWise has raised its dividend for 1 consecutive years. MarketWise is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

23.0% of MarketWise shares are held by institutional investors. Comparatively, 95.7% of LPL Financial shares are held by institutional investors. 29.9% of MarketWise shares are held by insiders. Comparatively, 0.6% of LPL Financial shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings and price targets for MarketWise and LPL Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MarketWise	0	1	1	0	2.50
LPL Financial	0	3	14	0	2.82

LPL Financial has a consensus target price of $409.69, indicating a potential upside of 27.28%. Given LPL Financial’s stronger consensus rating and higher probable upside, analysts plainly believe LPL Financial is more favorable than MarketWise.

Profitability

This table compares MarketWise and LPL Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MarketWise	0.70%	-0.96%	1.10%
LPL Financial	5.13%	32.20%	9.35%

Valuation & Earnings

This table compares MarketWise and LPL Financial”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MarketWise	$328.12 million	0.90	$5.62 million	$0.88	21.39
LPL Financial	$16.99 billion	1.49	$863.02 million	$12.54	25.67

LPL Financial has higher revenue and earnings than MarketWise. MarketWise 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

MarketWise has a beta of 0.21, suggesting that its stock price is 79% less volatile than the S&P 500. Comparatively, LPL Financial has a beta of 0.53, suggesting that its stock price is 47% less volatile than the S&P 500.

Summary

LPL Financial beats MarketWise on 13 of the 17 factors compared between the two stocks.

About MarketWise

MarketWise, Inc. operates a content and technology multi-brand platform for self-directed investors in the United States and Internationally. Its platform includes subscription businesses that provides financial research, software, education, and tools to navigate the financial markets. The company offers various investment strategies, such as value investing, income, growth, commodities, cryptocurrencies, venture, crowdfunded investing, biotechnology, mutual funds, options, and trading; investment research product portfolio through a range of media, including desktops, laptops, tablets, and mobile; and financial newsletters. It provides a suite of stock research tools and portfolio management services under the Chaikin Analytics brand; portfolio management software tools under the TradeSmith brand name; and database of accounting-based financial summaries under the Altimetry brand. In addition, the company develops screeners, monitors, portfolio management tools, and proprietary indicators that produce a composite score to rank publicly traded companies. The company was founded in 1999 and is headquartered in Baltimore, Maryland.

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.