TD Ameritrade Holding Corporation (NASDAQ: AMTD) and Investment Technology Group (NYSE:ITG) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, dividends, risk, valuation, profitability, analyst recommendations and institutional ownership.

Earnings and Valuation

This table compares TD Ameritrade Holding Corporation and Investment Technology Group’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
TD Ameritrade Holding Corporation $3.46 billion 6.69 $844.80 million $1.60 27.39
Investment Technology Group $464.03 million 1.46 -$8.61 million ($0.26) -78.50

TD Ameritrade Holding Corporation has higher revenue and earnings than Investment Technology Group. Investment Technology Group is trading at a lower price-to-earnings ratio than TD Ameritrade Holding Corporation, indicating that it is currently the more affordable of the two stocks.

Dividends

TD Ameritrade Holding Corporation pays an annual dividend of $0.72 per share and has a dividend yield of 1.6%. Investment Technology Group pays an annual dividend of $0.28 per share and has a dividend yield of 1.4%. TD Ameritrade Holding Corporation pays out 45.0% of its earnings in the form of a dividend. Investment Technology Group pays out -107.7% 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.

Analyst Recommendations

This is a summary of current ratings and target prices for TD Ameritrade Holding Corporation and Investment Technology Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TD Ameritrade Holding Corporation 0 6 9 0 2.60
Investment Technology Group 0 0 1 0 3.00

TD Ameritrade Holding Corporation presently has a consensus target price of $44.75, indicating a potential upside of 2.12%. Investment Technology Group has a consensus target price of $20.00, indicating a potential downside of 2.01%. Given TD Ameritrade Holding Corporation’s higher probable upside, research analysts clearly believe TD Ameritrade Holding Corporation is more favorable than Investment Technology Group.

Insider & Institutional Ownership

90.9% of TD Ameritrade Holding Corporation shares are held by institutional investors. Comparatively, 87.2% of Investment Technology Group shares are held by institutional investors. 0.4% of TD Ameritrade Holding Corporation shares are held by insiders. Comparatively, 2.4% of Investment Technology Group shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Risk and Volatility

TD Ameritrade Holding Corporation has a beta of 1.48, meaning that its stock price is 48% more volatile than the S&P 500. Comparatively, Investment Technology Group has a beta of 1.44, meaning that its stock price is 44% more volatile than the S&P 500.

Profitability

This table compares TD Ameritrade Holding Corporation and Investment Technology Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
TD Ameritrade Holding Corporation 24.01% 16.09% 2.89%
Investment Technology Group -1.77% 3.08% 1.42%

Summary

TD Ameritrade Holding Corporation beats Investment Technology Group on 12 of the 16 factors compared between the two stocks.

About TD Ameritrade Holding Corporation

TD Ameritrade Holding Corporation is a provider of securities brokerage services and related technology-based financial services. The Company provides its services to retail investors, traders and independent registered investment advisors (RIAs). The Company provides its services through the Internet, a national branch network and relationships with RIAs. The Company’s products and services include common and preferred stock, exchange-traded funds, options, futures, foreign exchange, mutual funds, fixed income, new and secondary issue securities, margin lending, cash management services and annuities. The Company uses its platform to offer brokerage services to retail investors and investment advisors. In addition, it also offers various products and services to retail clients, such as touch-tone trading, trading over the Internet, real-time quotes, extended trading hours and direct access to market destinations.

About Investment Technology Group

Investment Technology Group, Inc. (ITG) is a financial technology company that helps brokers and asset managers improve returns for investors around the world. The Company operates through four segments: U.S. Operations, Canadian Operations, European Operations and Asia Pacific Operations. These four segments provide categories of products and services, such as Execution Services, Workflow Technology and Analytics. Execution Services includes self-directed trading using algorithms, smart routing and matching through POSIT in cash equities, futures and options trading and portfolio trading and high-touch trading desks providing execution expertise. Workflow Technology includes trade order and execution management software applications in addition to network connectivity. Analytics includes tools enabling portfolio managers and traders to improve pre-trade, real-time and post-trade execution performance; portfolio construction and optimization decisions, and securities valuation.

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