Hennessy Advisors (NASDAQ:HNNA) and Nasdaq (NASDAQ:NDAQ) Head to Head Review

Hennessy Advisors (NASDAQ:HNNA) and Nasdaq (NASDAQ:NDAQ) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, dividends, earnings, valuation, risk, analyst recommendations and institutional ownership.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Hennessy Advisors and Nasdaq, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hennessy Advisors	0	1	0	0	2.00
Nasdaq	0	3	9	1	2.85

Nasdaq has a consensus price target of $109.25, indicating a potential upside of 18.44%. Given Nasdaq’s stronger consensus rating and higher possible upside, analysts clearly believe Nasdaq is more favorable than Hennessy Advisors.

Profitability

This table compares Hennessy Advisors and Nasdaq’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hennessy Advisors	24.77%	8.31%	5.48%
Nasdaq	22.60%	18.38%	7.63%

Institutional & Insider Ownership

10.3% of Hennessy Advisors shares are owned by institutional investors. Comparatively, 72.5% of Nasdaq shares are owned by institutional investors. 36.0% of Hennessy Advisors shares are owned by company insiders. Comparatively, 0.6% of Nasdaq shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Hennessy Advisors pays an annual dividend of $0.60 per share and has a dividend yield of 5.8%. Nasdaq pays an annual dividend of $1.24 per share and has a dividend yield of 1.3%. Hennessy Advisors pays out 57.7% of its earnings in the form of a dividend. Nasdaq pays out 36.2% 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. Nasdaq has raised its dividend for 14 consecutive years.

Earnings & Valuation

This table compares Hennessy Advisors and Nasdaq”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hennessy Advisors	$35.54 million	2.28	$9.96 million	$1.04	9.88
Nasdaq	$8.22 billion	6.27	$1.79 billion	$3.43	26.89

Nasdaq has higher revenue and earnings than Hennessy Advisors. Hennessy Advisors is trading at a lower price-to-earnings ratio than Nasdaq, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Hennessy Advisors has a beta of 0.56, meaning that its share price is 44% less volatile than the S&P 500. Comparatively, Nasdaq has a beta of 0.99, meaning that its share price is 1% less volatile than the S&P 500.

Summary

Nasdaq beats Hennessy Advisors on 15 of the 18 factors compared between the two stocks.

About Hennessy Advisors

Hennessy Advisors, Inc. is an employee owned investment manager. It provides its services to Hennessy Funds and investment companies. The firm launches and manages equity, fixed income, and balanced mutual funds. It invests in the public equity and fixed income markets across the globe. The firm primarily invests in growth stocks of companies. It conducts in-house research to make its investments. Hennessy Advisors, Inc. was founded in 1989 and is based in Novato, California with additional offices in Boston, Massachusetts and Chapel Hill, North Carolina.

About Nasdaq

Nasdaq, Inc. operates as a technology company that serves capital markets and other industries worldwide. It operates in three segments: Capital Access Platforms, Financial Technology, and Market Services. The Capital Access Platforms segment sells and distributes historical and real-time market data; and develops and licenses Nasdaq-branded indices and financial products. This segment also offers investor relations intelligence, governance solutions, and ESG solutions; and insights and workflow solutions, as well as operates listing platforms. The Financial Technology segment offers Verafin, a cloud-based platform to detect, investigate, and report money laundering and financial frauds; surveillance solutions, including a SaaS platform to assist in complying with market rules, regulations, and internal market surveillance policies; AxiomSL, a risk data management and regulatory reporting solution; and Calypso, a front-to-back trading technology solution for the financial market. This segment also handles assets, comprising cash equities, equity derivatives, currencies, various interest-bearing securities, commodities, energy products, and digital currencies; and trade management and colocation services. The Market Platforms segment offers equity derivative trading and clearing, cash equity trading, fixed income and commodities trading and clearing, and currency trading services. This segment operates various exchanges and other marketplace facilities across various asset classes which includes derivatives, commodities, cash equity, debt, structured products, and exchange traded products; and provides clearing, settlement, and central depository services. The company was formerly known as The NASDAQ OMX Group, Inc. and changed its name to Nasdaq, Inc. in September 2015. Nasdaq, Inc. was founded in 1971 and is headquartered in New York, New York.