Comparing Futu (NASDAQ:FUTU) & Northern Trust (NASDAQ:NTRS)

Futu (NASDAQ:FUTU) and Northern Trust (NASDAQ:NTRS) are both large-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, earnings, valuation, profitability, dividends, institutional ownership and analyst recommendations.

Analyst Recommendations

This is a summary of recent ratings and price targets for Futu and Northern Trust, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Futu	0	4	2	0	2.33
Northern Trust	2	10	3	0	2.07

Futu currently has a consensus target price of $139.91, suggesting a potential upside of 28.64%. Northern Trust has a consensus target price of $183.93, suggesting a potential upside of 9.16%. Given Futu’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Futu is more favorable than Northern Trust.

Dividends

Futu pays an annual dividend of $2.55 per share and has a dividend yield of 2.3%. Northern Trust pays an annual dividend of $3.52 per share and has a dividend yield of 2.1%. Futu pays out 25.2% of its earnings in the form of a dividend. Northern Trust pays out 30.2% 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. Futu is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation and Earnings

This table compares Futu and Northern Trust”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Futu	$2.94 billion	5.19	$1.46 billion	$10.10	10.77
Northern Trust	$14.30 billion	2.16	$1.74 billion	$11.65	14.46

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

Volatility & Risk

Futu has a beta of 0.45, suggesting that its share price is 55% less volatile than the S&P 500. Comparatively, Northern Trust has a beta of 1.24, suggesting that its share price is 24% more volatile than the S&P 500.

Profitability

This table compares Futu and Northern Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Futu	42.95%	28.20%	4.40%
Northern Trust	14.76%	16.91%	1.18%

Institutional & Insider Ownership

83.2% of Northern Trust shares are held by institutional investors. 35.2% of Futu shares are held by insiders. Comparatively, 0.7% of Northern Trust 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.

Summary

Futu beats Northern Trust on 9 of the 16 factors compared between the two stocks.

About Futu

Futu Holdings Limited provides digitalized securities brokerage and wealth management product distribution service in Hong Kong and internationally. It offers online financial services, including securities and derivative trades brokerage, margin financing and fund distribution services through its Futubull and Moomoo digital platforms. The company also provides financial information and online community services; online wealth management services under the Money Plus brand name through its Futubull and moomoo platforms, which provides its client access to mutual funds, private funds, bonds, structured products, and other wealth management products; market data and information services; and NiuNiu Community, which serves as an open forum for users and clients to share insights, ask questions, and exchange ideas. Futu Holdings Limited was founded in 2007 and is headquartered in Sheung Wan, Hong Kong.

About Northern Trust

Northern Trust Corporation, a financial holding company, provides wealth management, asset servicing, asset management, and banking solutions for corporations, institutions, families, and individuals worldwide. It operates in two segments, Asset Servicing and Wealth Management. The Asset Servicing segment offers asset servicing and related services, including custody, fund administration, investment operations outsourcing, investment management, investment risk and analytical services, employee benefit services, securities lending, foreign exchange, treasury management, brokerage services, transition management services, banking, and cash management services. This segment serves corporate and public retirement funds, foundations, endowments, fund managers, insurance companies, sovereign wealth funds, and other institutional investors. The Wealth Management segment offers trust, investment management, custody, and philanthropic; financial consulting; guardianship and estate administration; family business consulting; family financial education; brokerage services; and private and business banking services. This segment serves high-net-worth individuals and families, business owners, executives, professionals, retirees, and established privately held businesses. The company also provides asset management services, such as active and passive equity; active and passive fixed income; cash management; muti-asset and alternative asset classes comprising private equity and hedge funds of funds; and multi-manager advisory services and products through separately managed accounts, bank common and collective funds, registered investment companies, exchange traded funds, non-U.S. collective investment funds, and unregistered private investment funds. In addition, it offers overlay and other risk management services. Northern Trust Corporation was founded in 1889 and is headquartered in Chicago, Illinois.