Comparing LPL Financial (NASDAQ:LPLA) and Deutsche Boerse (OTCMKTS:DBOEY)

Deutsche Boerse (OTCMKTS:DBOEY) and LPL Financial (NASDAQ:LPLA) are both large-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, profitability, dividends, risk, valuation, earnings and institutional ownership.

Insider and Institutional Ownership

95.7% of LPL Financial shares are held by institutional investors. 0.6% of LPL Financial shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Deutsche Boerse and LPL Financial”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Deutsche Boerse	$6.82 billion	9.25	$2.26 billion	$1.42	24.91
LPL Financial	$16.99 billion	1.30	$863.02 million	$12.54	22.38

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

Risk & Volatility

Deutsche Boerse has a beta of 0.43, meaning that its stock price is 57% less volatile than the S&P 500. Comparatively, LPL Financial has a beta of 0.53, meaning that its stock price is 47% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Deutsche Boerse and LPL Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Deutsche Boerse	1	2	2	0	2.20
LPL Financial	0	3	14	0	2.82

LPL Financial has a consensus target price of $399.31, suggesting a potential upside of 42.31%. Given LPL Financial’s stronger consensus rating and higher probable upside, analysts clearly believe LPL Financial is more favorable than Deutsche Boerse.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Deutsche Boerse	34.07%	21.00%	0.66%
LPL Financial	6.83%	32.36%	9.51%

Dividends

Deutsche Boerse pays an annual dividend of $0.28 per share and has a dividend yield of 0.8%. LPL Financial pays an annual dividend of $1.20 per share and has a dividend yield of 0.4%. Deutsche Boerse pays out 19.7% of its earnings in the form of a dividend. LPL Financial pays out 9.6% 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.

Summary

LPL Financial beats Deutsche Boerse on 11 of the 16 factors compared between the two stocks.

About Deutsche Boerse

Deutsche Börse AG operates as an exchange organization in Europe, America, and the Asia-Pacific. The company operates through four segments: Data & Analytics; Trading & Clearing; Fund Services; and Securities Services. It engages in the trading of derivatives, electricity and gas products, emission rights, foreign exchange, and commodity products; operating EEX and 360T over the counter trading platform for financial instruments, such as foreign exchange, money market, and interest rate products; and operating as a central counterparty. The company also operates in the cash market through Xetra, Börse Frankfurt, and Tradegate trading venues; Qontigo, an integrated suite of front-to-back investment management solution; and a central counterparty for equities and bonds, as well as provides pre-ipo and listing services. In addition, it offers custody and settlement services for securities; investment fund services; connectivity services; and global securities funding and financing, and collateral and liquidity management, as well as secured money, market transaction, and repos and securities lending transaction services. Further, the company provides order routing, settlement, asset management, and custody; investment distribution and placement; infrastructure and post-trading; index, analytics, and risk; securities transactions settlement; securities custody and administration; and market data and analytics services. Additionally, it operates third clearing house Nodal Clear; and specialized software as a service platform for trading participants and digital business platform, as well as offers information technology solutions, including financial market, commodities market, and network connectivity solutions under the Deutsche Börse and 7 Market Technology brands. The company was founded in 1585 and is headquartered in Eschborn, Germany.

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.